Venmo 1099-K Reporting Reprieve
A scheduled change in the Venmo 1099-K reporting threshold has been delayed, and will now impact filers a little over a year from now, as opposed to next month.
1099-K is a form that 3rd party payment processors prepare and send to the IRS and to each payment recipient, reporting the amount of money sent to that payment recipient in the previous calendar year. For example, if you sold products throughout the year in exchange for payments collected via PayPal, PayPal might send a 1099-K to you the following January, reporting the total of the payment amounts processed in the prior year. Venmo, Amazon, VISA, and a number of others are additional sources of 1099-K filers.
Note that this requirement only applies to payments made in a business setting – amounts remitted in exchange for goods and services. It does not apply, for example, to Venmo payments made between friends to split the costs of a pizza, or funds transferred by a generous relative making a gift.
Historically, for a 1099-K to be required, both of two thresholds must have been exceeded: (1) The combined amount received in a year for all transactions must have exceeded $20,000, and (2) there must have been more than 200 transactions. For 2023 activity, though (impacting reports due in January 2024), a 2021 law set in motion the lowering of that threshold to require filing for annual totals of $600 and eliminated the 200-transaction floor. In other words, even one or two transactions will trip the filing requirement, once the combined/cumulative dollar amount exceeds $600.
These much more stringent thresholds were scheduled to come to life now, for 2023 forms filed beginning next month. However, in response to many processors complaining about the onerous new filing burden, a few weeks ago the IRS delayed the change for a year, leaving the $20,000/200 specs in place for 2023’s filings that are due in early 2024. There is also speculation that a year from now when the rule is implemented, the dollar amount may (temporarily, for a transition period) be changed from the intended $600 instead to $5,000. In the meantime, the historical rules apply.