PayPal Policy change ?

[RussTii]

As someone who utilizes Paypal with regularity I was not amused to receive an E-mail stating their intention to provide a 1099 Tax Form for any account providing goods and/or services valued over $600 presumably on an annualized basis, retroactive to Jan 1, 2022. Has anyone else gotten this same E-mail, explained as a new IRS policy ?

[02Les]

Yes.

I believe last year the amount was $20,000 before tax. Big difference. I believe PayPal is increasing its transaction charge also.

Perhaps we'll go back to using Money Orders again?

Edited May 23, 2022 by 02Les

[Mike Self]

Per Esty's explanation below---1099K is a new one on me, and I've been dealing with theses 1099 forms in my own business for many years... Check either with your tax person or on-line to see exactly what they're using it for; a 1099MISC used to be used when you paid an individual more than $600 in one year for "services rendered" (for example, a babysitter, yard work person etc)--not for a "casual sale" of goods; that's now a 1099NEC (non-employee compensation) to pay for services rendered (babysitter etc) in excess of $600.  The recipient doesn't have to file it with their taxes, the issuer does.   I dunno if the 1099K works the same way; if it does, then tenants would have to issue a 1099K to their landlords for the rent they paid during the year...and that doesn't make much sense (except to Congress!).  But check with your tax person...I'm no expert but do have to handle 1099NECs every year.  

 

mike

[esty]

this is old news, our democrats in congress did the dirty and it sucks a big one...it's not just paypal, ebay, and all other online payment sources

 

Quote

2022 Form 1099-K thresholds

In March 2021, the American Rescue Plan Act of 2021 [PDF 765 KB] was enacted, providing funding for COVID-19 relief. However, the legislation also contained amendments to section 6050W, dropping the de minimis threshold to $600 without regard to the number of transactions, effectively aligning Form 1099-K reporting with Form 1099-NEC (which was detached from Form-MISC in the prior year). The legislation went into effect beginning with returns submitted after December 31, 2022, meaning all payments that occur throughout 2022 are subject to the lower requirement.

A provision under the Build Back Better Act would provide transitional relief for backup withholding in 2022, by maintaining the 200 transaction de minimis threshold. Unfortunately for taxpayers concerned about their reporting obligations, the bill has stalled in the Senate. Thus, as it stands, taxpayers need to consider transitioning their due diligence processes in order to capture Form 1099-K reportable transactions under the lower thresholds for payments made in 2022.

 

[jimk]

We need the regulation eliminator back in office.

[M3M3]

38 minutes ago, jimk said:

We need the regulation eliminator back in office.

Oh hell no.

[tech71]

Guys, please. Dont, just dont. Not here.

[jp5Touring]

Joe said he would go after the super wealthy.  

 

[Son of Marty]

Plenty of political boards take this shit there, please.

[JsnPpp]

 

1 hour ago, Son of Marty said:

Plenty of political boards take this shit there, please.

100% agree. Stop it now.

[Stevenc22]

1099-K is not the same as a 1099-Misc or NEC. Its more of an information form, and the recipient doesn't pickup a 1099-K on their tax return the same way you pickup a 1099-Misc/NEC on your return. This just notifies the IRS of how much money moved through the account. Its more used to trigger IRS audits when someone claims no income but has tons of money moving through an account.

[bergie33]

The 1099k had been around for years. It is a third party payer reporting form. It was previously used only by credit card processors/banks, but now with other third parties like eBay, Venmo and PayPal, more and more people will be receiving these forms. In addition, the reporting amount was lowered as of this year.  Some of the companies were only issuing forms to business accounts, I think Venmo was one of those.  

[BarneyT]

No different than if you paid your yard man over $600 in checks, Same form, same notification… Just the man finally catching up with a new forms of payment…

[esty]

1 hour ago, BarneyT said:

No different than if you paid your yard man over $600 in checks, Same form, same notification… Just the man finally catching up with a new forms of payment…

who knows you paid the yard man in checks other than you & him unless you send him a 1099, in which case, the IRS knows you paid him

 

anyone here that has  at least $600.00 + in sales paid for by paypal or any other online venue is going to have to do some extra tax work

[bergie33]

1099's only apply if the payer is a business.  If you pay your yard guy $5,000 you wouldn't send him a 1099 since you aren't operating a business.  Now if you pay your yard guy to care for the lawn at your rental property, then you would send a 1099-NEC, since your rental is a business.

 

The new reporting limits for third party payers is a nightmare for all involved, especially since it caught almost all individuals by surprise.  I have clients who had to scramble after the fact and track down receipts and other support for a few small sales they made on e-bay.

 

* I'm a CPA, I do this for a living.