For 2024, the IRS has provided a transition relief period, raising the threshold for Form 1099-K reporting. Payment platforms such as PayPal, Venmo, and eBay will now issue a 1099-K form if a seller’s transactions total $5,000 or more in gross payments for the calendar year. This is a temporary increase from the $600 threshold initially planned under the American Rescue Plan of 2021
IRS Notice 2024-85 explains a gradual rollout for new reporting rules on Form 1099-K. Payment platforms must report payments over $5,000 in 2024, $2,500 in 2025, and $600 starting in 2026. This phased approach gives people and businesses more time to adapt. Additionally, for 2024, there’s some leniency with penalties related to incorrect backup withholding, but full enforcement begins afterward. The goal is to balance smoother compliance with enhanced tax reporting requirements.
