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Third-party Payment Platform Change - Effective January 1



Beginning January 1, 2023, all third-party payment platforms are required to issue a 1099-K when payments to businesses for goods and services exceed $600. While the IRS is targeting businesses, this means that any personal transactions over the limit could end up being flagged in an IRS audit.


What does this mean for your personal transactions?

This means that if you receive $600 or more in a single transaction, you could be subject to an audit in which you would have to prove that the transaction in question is not business related. Selling a large household item to a neighbor? Going on a trip with friends and reimbursing someone for the purchase of flights or hotels? You might think twice about using third-party payment platforms for such transactions.


What does this mean for business transactions?

As of January 1, 2023, third-party payment platforms will be required to issue a 1099-K for all transactions exceeding $600.


What is Reported on a 1099-K?

  • by payment cards for goods and services, you will receive one Form 1099-K for the total amount of the payments from each payment card.

  • from a third-party payment app, you will receive one Form 1099-K from that organization for the total amount.

When will I receive the 1099-K and what should I do with it?

2022 Forms 1099-K must be furnished to the payee by January 31, 2023. Use this information return with your other tax records to determine your correct tax.


What is NOT reported on a 1099-K?

Money received as a gift or reimbursement of a share of a meal or rent should not be reported on a 1099-K. Payment notes should indicate whether they are personal to family and friends or a business transaction for goods and services.


As always, if you have ANY questions, please contact The Tax Place - Lubbock!

806-796-7170

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