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New 2022 Form 1099-K threshold!

The American Rescue Plan Act of 2021 indeed brought significant changes to reporting requirements, particularly concerning Form 1099-K, which is utilized to report Payment Card and Third-Party Network Transactions. These transactions encompass various types of payments made to merchants or individuals through credit card networks or third-party payment processors. The lowered threshold mandated by the American Rescue Plan Act of 2021 means that more transactions are now subject to reporting on Form 1099-K.

Form 1099-K is typically used to report payments made via credit card transactions, debit card transactions, and other electronic payment methods facilitated by third-party payment processors such as PayPal, Stripe, Square, and others. These payments can include:

  • From payment card transactions (e.g., debit, credit, or stored-value cards), and/or
  • In settlement of third-party payment network transactions above the minimum reporting thresholds.

For returns for calendar years after 2021, payors must report gross payments that exceed $600 and any number of transactions. This is quite a step down from the prior requirement for payors to report gross payments that exceed $20,000 and more than 200 such transactions. Now, a third-party settlement organization must report any information concerning third party network transactions of any participating payee only if the gross amount of total reportable payment transactions exceeds $600 for the calendar year, regardless of the number of transactions.

Also, it is worth noting that the Form 1099-K (Rev. January 2022) is now a continuous use form.

Check out the Form 1099-K and Instructions, both revised in January 2022, here:

https://www.irs.gov/pub/irs-pdf/f1099k.pdf

https://www.irs.gov/instructions/i1099k

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1099-K

This document contains general information only and is not a substitute for accounting, tax, or any other professional advice or services. The information provided is considered accurate at the time of publishing and will not be updated with new regulation requirements.

Form 1099-K: IRS Updates to FAQ’s

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