In the recent IR-2024-299 released at the end of November, the IRS indicated that the 1099-K threshold is delayed again. The 1099-K form is used by Third party settlement organizations (TPSOs) like Venmo and similar cash apps and credit card processing vendors.
The thresholds will be:
- 2024 – $5,000
- 2025 – $2,500
- 2026 – $600
Note that in previous years, the threshold was $20,000 and/or 200 transactions. Now there will be more scrutiny as more individuals will be required to report what happened with those funds in their tax returns (in addition to businesses).
Imagine that you are the soccer captain and get $50 from each player (15 players on the roster) via Vemno to pay for the league. Then, you got $750 via Vemno and you will receive a 1099-K in 2026 as over the threshold. Probably you will have to report the gross amount of payments and offset it against an expense in a Schedule C, so the net impact is zero.
The reduction of the threshold might impact individuals that just transfer money for social activities (i.e. dinners, sports, etc.) and are not gig workers. If you receive a 1099-K form, you should report it in your tax return or you will get an IRS with the discrepancy.
Link Journal of Accountancy – IRS again delays effective date of $600 threshold for Form 1099-K reporting
