Funviralpark The Internal Revenue Service on Friday gave millions of Americans a year on new tax filing requirements and delayed the implementation of a law that would require e-commerce platforms such as eBay.,
Etsy and Airbnb provide tax authorities with information about users earning more than $600.
The delay means the platform won’t have to send thousands of 1099-K tax returns to sellers and the IRS in early 2023, prompting companies to push against the $600 threshold to change the law next year. It will give you more time to do it.
Congress passed the $600 threshold for Form 1099-K reports in March 2021 as part of the U.S. Relief Plans Act, which was scheduled to take effect in tax year 2022. Until this change, the platform had to report a user’s income to her IRS. Over 200 transactions and $20,000 in earnings. Legislators have lowered thresholds to strengthen tax compliance in the often-deficient area of unreported business income.
Late in Congress this year, lawmakers from both parties debated whether to raise the $600 threshold or delay its implementation. After those efforts failed this week, the IRS belatedly stepped in. Treasury Department and IRS officials said Friday they want to work with industry groups over the next year to make sure the forms reach the right taxpayers.
The $600 threshold impacts many gig workers who are independent contractors and do not report their income on their tax returns. Paying taxes on those earnings can come as a shock.
The problem is different with many sellers on eBay and similar platforms, especially “casual” resellers who clean out closets and attics. A form’s gross income is not necessarily all income. Such vendors do not have to pay taxes if they sell items for less than what they paid for, or, with respect to the sale of inherited items, less than the value of the item on the date of death.
The 2021 tax reform did not require these sellers to file tax returns to support the deduction, but emphasized the need to keep such records in case of an IRS audit. . It also provided agencies with a way to find some platform users with significant unreported income. The IRS uses document matching software to match 1099 forms to taxpayer returns and select a few for scrutiny.
A delay does not change your taxable income, only the information the IRS receives. Sellers and gig economy workers are required to track and report their income.
Reporting rules are intended to capture commercial transactions only, not people who use Venmo or other payment apps to give gifts or split meal costs.
write destination Laura Saunders ([email protected]) and Richard Rubin ([email protected])
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