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The IRS said Tuesday that the old threshold will remain in place — this January companies will be required to send the tax form, known as a 1099-K, only to people who made more than $20,000 and 200 transactions on the platforms.
The change doesn’t make a difference in how much tax anyone owes. People who earn their income on the apps still owe income tax, whether the app reports their earnings to them on a 1099-K.
Democrats who sought the lower threshold argued that transparency would benefit both taxpayers and the government. Gig workers would have a tax form to make paying their taxes more straightforward, instead of having to laboriously tally up their own income over the course of the year, for instance. And since the companies would have to send the 1099-K forms to both the taxpayers and the IRS, the agency would be able to spot people who are failing to report income.
Some Republicans have opposed the 1099-K change, warning about the dangers of the IRS prying into people’s personal exchanges. And some Democrats expressed regrets about the complexity of the new requirement after they voted it in, worrying that the $600 threshold was too low and thus too burdensome on the companies that would have to send potentially millions of 1099-Ks and the taxpayers who might be baffled to receive them.
Many companies have lobbied against the new rule, including platforms for selling event tickets, used clothes and artwork, as well as payment apps.
The IRS said Tuesday that it will require companies to send 1099-K forms to anyone with more than $5,000 in transactions on their platforms starting in 2025. The agency says it will implement the $600 rule the following year, giving Congress more time to change the law first.
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