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Home » $600 Rule For 2022 – New 1099 Reporting Requirements For Payment Apps
Note: IRS delays the rollout of the $600 threshold for 1099-K reporting.The threshold for Form 1099-K remains at $20,000 with a 200 transaction limit for the year 2023. This delay designates 2023 as a transition period, maintaining the existing requirements for reporting. Learn More
Note: IRS delays the rollout of the $600 threshold for 1099-K reporting.The threshold for Form 1099-K remains at $20,000 with a 200 transaction limit for the year 2023. This delay designates 2023 as a transition period, maintaining the existing requirements for reporting.
Here’s a simple approach to understand how the new $600 reporting requirements impact payment apps like PayPal, Venmo, Cash App, and others.
$600 – That’s the new reporting threshold for payment card entities and third-party networks.
If you’re a third-party payment network or a payment card company, you must have enrolled hundreds of merchants to enable convenient payment experiences for them. Major payment settlement entities like PayPal, Venmo, Cash App, and more have been doing this for years.
So far, you must have issued a Form 1099-K for each participating payee to whom you’ve paid $20,000 or higher AND comprising a transaction volume of 200 or more.
This was fine… until now.
The IRS introduced a couple of changes to the Form 1099-K reporting regime for payment entities like yours.
So, starting in 2022, you have to adapt to these new reporting requirements and file Form 1099-K.
How exactly will these changes translate to compliance?
How will these changes impact your business and your payees’ businesses?
Let’s take a look at all such perspectives in the following discussion.
Payment settlement entities or third party networks (PayPal, Venmo, Cash App, etc.) and payment card networks (credit/debit cards, online wallets, gift cards) in 2022 are required to file Form 1099-K if they have paid their participating payees a gross total of $600 or more regardless of the number of transactions.
Impact:
Also Read: American Rescue Plan Act Lowers Form 1099-K Reporting Threshold For The 2022
Payees are supposed to receive their 1099-K copies from the payers on or by the IRS deadline of January 31 of the calendar year. So, if you were paid $600 or more in 2022, you should receive a Form 1099-k from your payment settlement entity by January 31, 2023.
Also Read: Form 1099-K Changes 2022 – What Do They Mean For Your Business?
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