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$600 1099-K Threshold FAQs (1/3)

Here is an answer to one of the most common questions about this new over $600 1099-K rule.

Do payments from friends and families (splitting a check, gifts, etc.) count toward the form 1099-K filing threshold?

No, only payments for goods and services count toward the $600 limit. If you receive a Form 1099-K from a payment processor that includes non-business payments like gifts or settling up with friends, contact the processor and ask for a corrected form before you file your tax return. To help prevent this issue, remind friends and family to check the “Sending money to friends and family” option when sending payments.

Lower $600 1099-K Filing Threshold for Payment Processors – Did You Know?

A new IRS rule may affect millions of taxpayers who receive payments through third-party processors like PayPal, Venmo, Zelle and Square. The rule applies to payments for goods and services, including payments for independent contract, freelance and gig economy work.

Beginning in 2022, the annual threshold for filing a 1099-K form is $600 in gross payments for goods and services, with no minimum number of transactions. Payment processors must submit the form to the IRS and provide a copy to the recipient of the payments.

In most cases, you must report payments shown on a Form 1099-K as income on your tax return. Note that the form shows gross payment amounts, which may include processing fees. You generally must report the gross amount on your return, but you may be able to deduct processing fees and other charges as business expenses. A tax professional can help you properly figure your gross income and any deductions you are entitled to claim.

Possible Reasons for 2021 IRS Tax Refund Delays

Most taxpayers who file their returns electronically and request direct deposit generally receive their IRS refunds within 21 days. However, a variety of factors can result in longer return processing times. The IRS recently reminded taxpayers of the most common causes of tax refund delays, including:

- The return was mailed on paper instead of filed electronically. Filing a paper return typically doubles the expected wait time for a refund.
- The IRS needs more information to process the return. In this case, you will generally receive an IRS letter requesting the information.
- The return did not include banking information for direct deposit, so the IRS must mail a paper check.
- The return includes a request for an Injured Spouse refund allocation.

The IRS cannot provide information about refund status until at least 21 days after a return was electronically filed, or six weeks after a paper return was mailed.

IRS Where's My Refund Tool: https://www.irs.gov/refunds.