Effective January 1, 2022, the reporting threshold associated with Form 1099-K for certain third party networks has been reduced from $20,000 to $600 regardless of the number of transactions. Third party networks include businesses such as PayPal, Venmo, Etsy and Airbnb. Previously, third party networks had to issue Form 1099-K to taxpayers who either 1) accepted payment cards for payment for goods or services, or 2) received payments through third party networks that exceeded $20,000 in gross reportable payments and 200 transactions in a calendar year. Credit card transactions aren’t reportable under this provision.
The recipient of Form 1099-K should use the information when completing their annual income tax return. The form will include total annual payments and payments by month for the recipient to use to reconcile to their records.
Third party networks may choose to send Form W-9 to each recipient in order to obtain their employer’s identification number or the social security number to allow for property reporting at the end of the year.
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