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1099-K Reporting
Form 1099-K is used by third-party platforms or settlement organizations (including popular payment apps and online marketplaces) to report payments to merchants whose annual activity exceeds $20,000 in gross payments and has at least 200 transactions in a calendar year. The forms are usually issued the following year by March 31.
Reduce and Delay
With the American Rescue Plan Act of 2021, the threshold was dropped to $600 in total gross payments with the transaction count test scrapped entirely. However, implementation of the reduced threshold has been delayed several times, initially in 2022 and then again in 2023. So what’s the deal for 2024?
The Scoop on 2024
Late last year, the IRS all but scrapped the $600 threshold and instead landed on an arbitrary $5,000 threshold, with no test for total transaction count. They are calling it a phased approach of the $600 threshold, but we aren’t holding our breath. All we know is that the reporting threshold for 2024 will be $5,000 — period.
This marks a substantial departure from the previous $20,000 and 200 transaction requirement, encompassing a much larger group of merchants than ever before.
How This Impacts FastSpring Sellers
In 2023, FastSpring sellers were only subject to 1099-K reporting if they surpassed $20,000 in gross payments and 200 transactions. However, with the threshold dropping to $5,000 for 2024, we anticipate a dramatic rise in the number of sellers receiving this form, with over half likely receiving this form for the very first time.
At FastSpring, we keep up with the constant shifts in tax rules and regulations so that you don’t have to, allowing you to focus on growth while we manage the complexities of global tax.
Set up a demo or try it out for yourself.
For more information, you can view the IRS’s official announcement here.
