New Form 1099-K Threshold for the 2023 Tax Year

Updated on September 12, 2023 - 15.00 AM by Admin, TaxBandits

To enhance accessibility and transparency in digital payment tax reporting, the IRS has lowered the reporting threshold for Form 1099-K for the 2023 tax year from $20,000 and 200 transactions to $600, regardless of transaction limits. This means that individuals and businesses engaging in digital payment transactions of $600 or more will receive a Form 1099-K from each payment processor at the end of the tax year.

In this article, we will discuss the details of the Form 1099-K threshold change for the 2023 tax year, providing you with a comprehensive understanding of how it may affect you or your business.

In this article, we cover the following topics:

1. Overview of the Form 1099-K

The IRS Form 1099-K is used by the payment settlement entities to report the gross amount of payment transactions made under the following conditions

  • If you receive payments through Payment cards such as Debit cards, Credit cards, or stored value cards (gift cards).
  • If you receive payment of at least $600 through Third-party networks such as Payment apps (PayPal, Venmo, Cash app, etc.) or the marketplace.

2. Understanding 1099-K $600 reporting for 2023 Tax Year

Until the 2022 tax year, payment apps and online marketplaces were required to file Form 1099-K for individuals and businesses if their digital transactions exceeded $20,000 and 200 transactions during the tax year. This threshold was relatively high, which meant that many businesses did not have to file.

However, in an effort to improve the accessibility and transparency of digital payment tax reporting, the IRS has lowered the threshold drastically. Starting from the 2023 tax year, the threshold for reporting Form 1099-K has been reduced to $600, regardless of the number of transactions.

This means that any business or individual that processes $600 or more in digital payments through payment apps and online marketplaces will be subject to Form 1099-K reporting requirements. They will receive a Form 1099-K for each payment settlement entry if they meet or exceed this $600 threshold during the year.

Changes 2022 Tax Year 2023 Tax Year
Threshold limit $20,000 $600
Transactions 200 N/A

3. What are the state filing requirements for 1099-K?

State filing requirements for Form 1099-K can vary from the federal filing requirements. It's essential to be aware of these differences to ensure compliance with state tax regulations.

State reporting requirements can change from year to year, and for the year 2023, some states haven’t released their updated reporting requirements yet. This section will be updated once the state authorities release their reporting requirements for 2023, ensuring that you have the most current information to fulfill your tax obligations accurately and in compliance with state regulations.

Here are the state filing requirements for Form 1099-K for 2022.

State Filing requirement Threshold
Arizona If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Arkansas CF/SF $2,500 and 0 transaction
Colorado If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
District of Columbia Direct State filing $600 and 0 transaction
Georgia If State Withholding Form 1099-K should be reported regardless of the filing threshold.
Idaho If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Illinois Direct State filing $1,000 and 4 transactions
Indiana If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Iowa If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Kansas If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Kentucky If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Louisiana If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Maryland CF/SF $600 and 0 transaction
Massachusetts Direct State filing $600 and 0 transaction
Minnesota If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
New Jersey CF/SF $1,000 and 0 transaction
Rhode Island If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
South Carolina If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Utah If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Vermont Direct State filing $600 and 0 transaction
Virginia Direct State filing $600 and 0 transaction
West Virginia If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.
Wisconsin If State Withholding Form 1099-K should be reported regardless of the $600 filing threshold.

4. When is the Deadline to file Form 1099-K for the 2023 tax year?

Like other 1099 forms, the 1099-K follows the same deadline. Here is the Form 1099-K deadline for the 2023 tax year.

Recipient copy Deadline January 31, 2024
Paper filing Deadline February 28, 2024
E-filing Deadline April 01, 2024

While many states share the same deadline as the IRS for 1099-K reporting, there are exceptions. Learn more about state-specific filing requirements for 1099-K.

5. How to file Form 1099-K for 2023?

E-filing is the easiest way to report 1099-K payments to the IRS. Filing paper forms is a longer and less efficient process. Plus, if you are required to file more than 250 tax Forms with the IRS, your business is required to e-file regardless. TaxBandits helps you e-file Form 1099-K in just a few simple steps.

  • Enter the Form information
  • Review the Form information
  • Transmit the form to the IRS and state
  • Send recipient/payee copies through postal mailing or online access.

Why wait? Get started with TaxBandits today to e-file Form 1099-K and get the filing status in minutes. Pricing starts at $0.80/Form.

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