Renner Individual News; March 2, 2024

If you sold goods or services in 2023 and received payments through certain payment apps or online marketplaces or accepted payment cards, there’s a good chance you received a third-party reporting document Form 1099-K, Payment Card and Third Party Network Transactions.

The Internal Revenue Service (IRS) announced Notice 2023-74 in November for tax year 2023, which delayed the new federal law $600 reporting threshold for tax year 2023 on Form 1099-K — following feedback from taxpayers, tax professionals and payment processors, and to reduce taxpayer confusion.

The previous reporting thresholds remained in place for 2023, which are more than $20,000 in payments and more than 200 transactions. You could have still received forms below the threshold.

Regardless of whether you received a 1099-K or not, you must report your income, including payments received in cash, property, goods, digital assets or foreign sources or assets.

Form 1099-K is not meant to report personal payments like gifts and reimbursements.

What To Do at Tax Time

You need to understand why you may have received a Form 1099-K. You can then use it with your other tax records when it’s time to file your return. The form provides the gross amount of payment card/third-party network transactions, and it may include a combination of different kinds of total payments received.

Just because a payment is reported on a Form 1099-K does not mean it’s taxable.

You need to review the form or forms, determine if the amount is correct, and determine any deductible expenses associated with the payment that you may be able to claim when you file your 2023 return.

Selling Items at a Loss

If you sold items at a loss, meaning you paid more for the items than for what you sold them, there is not a tax liability. You can zero out the payment on your tax return by reporting both the payment and an offsetting adjustment on a Form 1040, Schedule 1. This will ensure if you received these forms, you don’t have to pay taxes you don’t owe.

Selling Items at a Gain

If you sold items at a gain, meaning you paid less than for what you sold it, you will have to report that gain as income, and it’s taxable.

See IRS.gov What to do with Form 1099-K for specific instruction on how to report personal item sales.

What To Do With a Form 1099-K Received in Error

It’s possible you received a Form 1099-K when you shouldn’t have if it:

  • Reports personal payments from family or friends like gifts or reimbursements.
  • Doesn’t belong to you.
  • Duplicates a Form 1099-K or other information reporting form you already received.

Don’t panic. If this happens, you should:

  • Contact the issuer immediately – see “Filer” on the top left corner of Form 1099-K to find out the name and contact information of the issuer.
  • Ask for a corrected Form 1099-K that shows a zero amount.
  • Keep a copy of the original form and all correspondence with the issuer for your records.
  • Don’t wait to file taxes. File even if a corrected Form 1099-K is unavailable.

What To Do With an Incorrect Form 1099-K

If the payee Taxpayer Identification Number (TIN) or gross payment amount is incorrect, you should request a corrected form from the issuer.

  • See “Filer” on the top left corner of Form 1099-K to find the name and contact information of the issuer. If you don’t recognize the issuer, you should contact the Payment Settlement Entity (PSE) identified on the bottom left corner of the form above their account number.
  • Keep a copy of the corrected Form 1099-K with other tax records, along with any correspondence from the issuer or PSE.
  • Don’t contact the IRS. The IRS can’t correct a Form 1099-K from an issuer. If you have questions about the 1099-K or other tax-related matters, contact Renner and Company here.

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