IRS Form 1099-K Threshold for the 2024 Tax Year
New Form 1099-K Threshold for the 2024 Tax Year
Updated on November 27, 2024 - 15.00 AM by Admin, TaxBandits
In November 2024, the IRS announced much-needed transition relief for third-party settlement organizations (TPSOs), such as payment apps and online marketplaces. This relief introduced the reporting thresholds for Form 1099-K, easing the compliance burden on TPSOs during the 2024 tax year. For the 2024 tax year, TPSOs must file Form 1099-K only if the aggregate payments to your payee exceed $5,000, regardless of the number of transactions.
In this article, we will discuss the details of the Form 1099-K threshold change for the 2024 tax year, providing a comprehensive understanding of how it may affect you or your business.
1. Overview of the Form 1099-K
Form 1099-K reports payment transactions made through third-party settlement organizations (TPSOs), which include payment apps, online marketplaces, and card processors. The form helps ensure that income received through such platforms is correctly reported to the IRS.
2. The new 1099-K reporting threshold for the 2024 tax year
The IRS has announced a new reporting threshold for Form 1099-K applicable to the 2024 tax year as part of a phased approach to reporting requirements for third-party settlement organizations (TPSOs). These organizations must report transactions when payments to your payee exceed $5,000, regardless of the number of transactions. This threshold is a temporary adjustment as the IRS transitions toward the lower reporting requirements established by the American Rescue Plan Act of 2021.
In 2025, the reporting threshold for 1099-K will decrease to $2,500, and TPSOs will not be required to report unless this threshold is exceeded, with no penalties for non-compliance. Starting in 2026, the reporting threshold will further drop to $600 in aggregate payments, meaning any participating payee receiving over $600 will receive a Form 1099-K, regardless of the number of transactions.
Why this Change?
- To ease the transition for TPSOs as they adapt to enhanced compliance and reporting requirements.
- To gradually provide time for businesses and taxpayers to adjust to the lower thresholds.
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 2024, some states haven’t released their updated reporting requirements yet. This section will be updated once the state authorities release their reporting requirements for 2024, 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 2024.
| State | Filing requirement | Threshold |
|---|---|---|
| Arizona | If State Withholding | Form 1099-K should be reported regardless of the $5,000 filing threshold. |
| Arkansas | CF/SF | Form 1099-K should be reported regardless of the $2,500 filing threshold. |
| Colorado | If State Withholding | Form 1099-K should be reported regardless of the $5000 filing threshold. |
| District of Columbia | Direct State filing | File if threshold is $5,000 |
| Georgia | If State Withholding | Form 1099-K should be reported regardless of the $5,000 filing threshold. |
| Idaho | CF/SF | Form 1099-K should be reported regardless of the $5,000 filing threshold. |
| Illinois | Direct State filing | $1,000 and 4 transactions |
| Indiana | Direct State filing | Form 1099-K should be reported regardless of the $5,000 filing threshold. |
| Iowa | If State Withholding | Form 1099-K should be reported regardless of the $1,500 filing threshold. |
| Kansas | If State Withholding | Form 1099-K should be reported regardless of the $5,000 filing threshold. |
| Kentucky | If State Withholding | Form 1099-K should be reported regardless of the $5,000 filing threshold. |
| Louisiana | CF/SF | Form 1099-K should be reported regardless of the $1,500 filing threshold. |
| Maryland | CF/SF | $1,500 |
| Massachusetts | Direct State filing | $1,500 |
| Minnesota | If State Withholding | Form 1099-K should be reported regardless of the $1,500 filing threshold.s |
| New Jersey | CF/SF | $1,000 and 0 transaction |
| Rhode Island | If State Withholding | Form 1099-K should be reported regardless of the $1,500 filing threshold. |
| South Carolina | If State Withholding | Form 1099-K should be reported regardless of the $1,500 filing threshold. |
| Utah | Direct State filing | Form 1099-K should be reported regardless of the $1,500 filing threshold. |
| Vermont | Direct State filing | $1,500 and 0 transaction |
| Virginia | Direct State filing | $1,500 and 0 transaction |
| Wisconsin | If State Withholding | Form 1099-K should be reported regardless of the $1,500 filing threshold. |
4. When is the Deadline to file Form 1099-K for the 2024 tax year?
Like other 1099 forms, the 1099-K follows the same deadline. Here is the Form 1099-K deadline for the 2024 tax year.
| E-filing Deadline | March 31, 2025 |
| Recipient Copy Deadline | January 31, 2025 |
| Paper Filing Deadline | February 28, 2025 |
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. Automate 1099-K Filing with TaxBandits API!
The lowered 1099-K reporting threshold means an increase in the number of forms you’ll need to file. Streamline the filing process by integrating TaxBandits API with your software to automate the generation and filing of 1099-K forms. Learn More!
6. How to file Form 1099-K for 2024?
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 10 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.
Helpful Resource for Form 1099-K
