The new rule, which would take effect for taxpayers with income of up to $600 dollars in applications such as Venmo, PayPal or Cash App it was deferred for a year, reported the Internal Revenue Service (IRS).
The IRS decided to delay the entry into force of the submission of the 1099-K forms, which received a wide wave of criticism, since it would force millions of people who sell products online and freelancers to declare all income starting at $600 dollars.
“The additional time will help reduce confusion during the upcoming 2023 tax filing season and will provide more time for taxpayers prepare for and understand the new reporting requirements,” said Acting IRS Commissioner Doug O’Donnell.
According to changes made by the IRS, apps like Venmo, PayPal, and Cash App would be required to submit 1099-K forms everyone with income above the new income limit.
The criteria changed noticeably, because until tax season this year, taxpayers received 1099-K forms for transactions from $20,000 dollars or when a maximum of 200 transactions is exceeded.
But in the face of criticism, which even reached the IRS from Congress, the tax office decided that tax season 2023 will be a transition period for the new rule to start from 2024.
“To help smooth the transition and ensure clarity for taxpayers, tax professionals, and the industry, the IRS will delay implementation,” the IRS said in a statement.
The acting commissioner of the IRS added that “The IRS and the Treasury heard a number of concerns”, according to the statement.
Income from applications must be declared
Although in the 2023 tax season, the rule will continue to require a 1099-K form for returns of more than $20,000 or more than 200 transactions, people who have income are required to pay taxes.
However, the IRS clarified that all personal transactions, whether a taxpayer makes to pay a friend or to pay for a divided meal, will not be tracked and is not considered income additional.
“The law is not intended to track personal transactions such as sharing the cost of a car ride or a meal, birthday or holiday gifts, or paying a family member or another person for a household bill,” the IRS detailed in the release.
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