If you are a gig worker, or you employ gig workers, you should be aware that last week the IRS released new guidance on when the Form 1099-K must be issued. Previously, businesses were required to issue a Form 1099-K to any person whom that business paid $600 or more in a single year. This understandably caused much commotion in the creative economy.
The new threshold is $20,000.00 or more than 200 transactions in a single year. This new threshold is effective retroactively for the current tax year.
NOTE: This IRS guidance only addresses the Form 1099-K reporting requirements, not the taxability of any income.
From the IRS: What is a Form 1099-K?
A Form 1099-K is an information return used to report payments you received during the year from: credit cards, debit cards or stored-value cards such as gift cards (payment cards) or payment apps or online marketplaces for goods or services (TPSOs).
You should receive a Form 1099-K if you sold a good or provided a service, you were paid through a payment app or online marketplace, and your gross payments and transactions are in excess of the reporting threshold, or you accepted a payment from a payment card for any amount. You may have a tax obligation if you had a gain on the sale of goods or received payment for services you provided.
If you have any questions about the above update, contact Tuk Law here.