By Leada Gore, al.com (TNS)
The IRS has advice or taxpayers who typically submit returns in late January or early February: You may want to wait a while in 2023.
In a recent release, the IRS warned that early filers may receive a 1099-K form, which will track third-party payment systems like Venmo, PayPal, Facebook Marketplace, Etsy, or Uber.
“The IRS cautions people in this category who may be receiving a Form 1099 for the first time—especially “early filers” who typically file a tax return during the month of January or early February—to be careful and make sure they have all of their key income documents before submitting a tax return,” the tax agency said.
“A little extra caution could save people additional time and effort related to filing an amended tax return. And if they have untaxed income on a Form 1099 that isn’t reflected on the tax return they initially file, that could mean they need to submit a tax payment with an amended tax return,” the IRS added.
The caution comes due to a change in how the IRS issues 1099-Ks.
Previously, 1099-Ks were issued when the total number of transactions exceeded 200 for the year and the aggregate amount of those transactions was more than $20,000. The American Rescue Plan Act of 2021 lowered the reporting threshold to $600 from any one source.
The deadline for companies to send the 1099-K form is Jan. 31, 2023. Due to the change, tax experts are recommending taxpayers file in late February or early March in 2023. That timeframe allows any misdirection or slowness with the mail to be corrected before taxpayers file and ensure the correct 1099-K is received.
The form doesn’t mean there’s a change in the taxability of income, the IRS said. All income, including from part-time work, side jobs or sale of goods is still taxable and must be reported unless excluded by law. Also, money received through payment networks from friends and relatives as personal gifts or reimbursements for person expenses – a person paying you back for a shared gift, for example – are not typically taxable expenses.
If you do receive a 1099-K and the information on it is incorrect, you should contact the payer – the company whose name appears on the upper left corner of the form – immediately. The error cannot be corrected by the IRS.
______
©2022 Advance Local Media LLC. Visit al.com. Distributed by Tribune Content Agency LLC.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
Tags: Income Tax, IRS, Taxes
