January 2025 Newsletter

Reporting for Form 1099-K has changed. Here's what you need to know:

What is a 1099-K? 

A tax form sent to anyone who's using a payment processor, payment apps (such as Paypal, Venmo, etc.), or online marketplaces to accept payments for selling goods or providing services

What's changed?

When Congress passed the American Rescue Plan in 2021, the law was changed so that the reporting threshold for Form 1099-K is $600. However, that proved difficult to implement, so the IRS has been easing taxpayers into the changes.

• For tax year 2023, the reporting threshold was $20,000 and 200 transactions.
• For tax year 2024, the reporting threshold will be $5,000.
• In the upcoming years, the IRS will get to the reporting threshold of $600, unless Congress passes new regulations.

However, there's no change to the taxability of income. All income, including from part-time work, side jobs or the sale of goods is still taxable. Taxpayers must report all income on their tax return unless it's excluded by law, whether they receive a Form 1099-K, Form 1099-NEC, or any other information return.

Personal transactions like birthday or holiday gifts, splitting the cost of a car ride or meal, or paying a family member or someone else for a household bill do not require reporting. Since these payments are not taxable, they should not be reported on Form 1099-K.

If you're looking for more information on reporting and tax preparation for your small business, feel free to reach out to our office.

Welcome the IRS to the 21st Century!

The IRS is making it easier for individuals and small business owners to manage their taxes online through its Digital First Initiative. The Business Tax Account now supports even more business types, including C corporations, giving millions of businesses access to helpful self-service tools.

What’s New for Businesses:

• Authorized representatives of C and S corporations can now view and pay tax balances and Federal Tax Deposits online.
• Sole proprietors and authorized representatives can speed up the lending process by using the IRS Income Verification Express Service (IVES) to approve or reject tax transcript requests from lenders.
• Business taxpayers can access tax returns, account details, and most entity transcripts in Spanish.
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What's New for Individuals:

The IRS has introduced several new features to make managing your individual taxes online easier and more convenient. Here’s what’s new:

Enhanced Services:

• Withholding Adjustments: You can now self-correct your withholding amounts.
• Redesigned Notices: Tax notices are clearer and easier to understand.
• Mobile-Friendly Forms: Digital tax forms are now mobile-adaptive.
• Spanish Support: Request tax transcripts in Spanish.
• Paperless Options: Sign up for paperless notifications and email updates.



Additional Tools:

• Lien Payoff Calculator: Generate an IRS letter confirming your payoff balance to share with authorized third parties.
• Audit Status Updates: Check the status of your correspondence audit online.
• Identity Protection PIN: Request a unique PIN to protect your identity.
• Multiple Payments at Once: Add, delete, and pay multiple balances in a single session.

These updates make tax management more convenient and efficient for business owners like you!