Individualized Systems

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.

IRS Raises Standard Mileage Rate for Second Half of 2022 – Did You Know?

In recognition of the recent rise in gas prices, the IRS has announced an increase to the optional standard mileage rate for the second half of 2022. For January 1 through June 30 of this year, the rate is set at 58.5 cents per mile. The rate will then rise to 62.5 cents per mile for the period from July 1 through December 31.

Note that the standard rate of 14 cents per mile for eligible charitable activities will not change.

IRS Issues Answers to FAQ About 2021 Child Tax Credit (2/3)

Q: How do I respond to a notice saying that the IRS changed the CTC amount on my return?

A: If you agree with the change made, you do not need to respond at all. However, if you believe the IRS made a mistake, you can call the number shown on the letter you received. Remember, you have the right to appeal any IRS decision.