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Issue Number:? ? FS-2024-07Inside This IssueWhat taxpayers should do if they received a Form 1099-K in 2024 If a taxpayer sold goods or services in 2023 and received payments through certain payment apps or online marketplaces or accepted payment cards, they could have received a third party reporting document Form 1099-K, Payment Card and Third Party Network Transactions. Following feedback from taxpayers, tax professionals and payment processors, and to reduce taxpayer confusion, the IRS announced Notice 2023-74, which delayed the new federal law $600 reporting threshold for tax year 2023 on Form 1099-K, Payment Card and Third Party Network Transactions. The previous reporting thresholds remained in place for 2023, which are more than $20,000 in payments and over 200 transactions. Taxpayers could have still received forms below the threshold. It?s important to know that regardless of if a taxpayer received a Form 1099-K or not, they must report their income. This includes payments they receive in cash, property, goods, digital assets or foreign sources or assets. The Form 1099-K should not report personal payments like gifts and reimbursements. What to do when filing taxes It?s important to understand why an individual received a Form 1099-K. Taxpayers can then use it with their other tax records when it?s time to file their return. The form provides the gross amount of payment card/third party network transactions and may include a combination of different kinds of total payments received. It's important to note, just because a payment is reported on a Form 1099-K does not mean it?s taxable. Taxpayers should review the form or forms, determine if the amount is correct, and determine any deductible expenses associated with the payment they may be able to claim when they file their taxes. Selling personal items at a loss If an individual sold items at a loss, which means they paid more for the items than for what they sold them, there is not a tax liability. They?ll be able to zero out the payment on their tax return by reporting both the payment and an offsetting adjustment on a Form 1040, Schedule 1. This will ensure if they received these forms, they don't have to pay taxes they don't owe. Selling personal items at a gain If an individual sold items at a gain, which means they paid less than for what they sold it, they will have to report that gain as income, and it's taxable. See IRS.gov What to do with Form 1099-K for specific instruction on how to report personal item sales. What to do with a Form 1099-K received in error People may get a Form 1099-K when they shouldn't have if it:
If this happens:
What to do with an incorrect Form 1099-K If the payee Taxpayer Identification Number (TIN) or gross payment amount is incorrect taxpayers should request a corrected form from the issuer.
Don't wait to file taxes. To file a tax return, take these steps:
More Information See What to do with Form 1099-K for more information on how to report an incorrect Form 1099-K. See Understanding Your Form 1099-K and Form 1099-K FAQs for more information.
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