The Internal Revenue Service reminds taxpayers who receive income from the sale of goods and/or services that they might receive Form 1099-K, Payment Card and Third-Party Network Transactions, in the early part of 2023 if their total payment card and third-party network transactions for the 2022 year exceeded $600.
Form 1099-K, has undergone modifications and clarifications that solely apply to reporting third party network transactions and NOT payment card transactions. The $600 level for third party network transactions is now more closely aligned with the $600 reporting minimum for the Form 1099-NEC, Nonemployee Compensation, and the Form 1099-MISC, Miscellaneous Information. There has never been a threshold for reporting on credit card transactions.
Systemic computer matching to tax returns using the information from Form 1099-K, will be used to find probable unreported income.
The reporting requirements for Form 1099-K are the only thing that have changed; the taxability of income remains same. Income is still taxable, whether it comes from full-time employment, side gigs, or the sale of items. All income, regardless of whether the taxpayer receives a Form 1099-NEC, Nonemployee Compensation, Form 1099-K, or any other information return, must be reported on their tax return unless it is specifically exempted by law.
The IRS underlines that money received from friends and family as personal presents or reimbursements for personal expenses through third-party payment applications is not taxable. They should contact the issuer if a Form 1099-K is inaccurate and shows money they did not get. It cannot be fixed by the IRS.