CEDAR RAPIDS, Iowa (KCRG) – More people could receive a tax form in the mail this year that they’ve never seen before: a 1099-K form.
The 1099-K form is a requirement for companies like ‘Venmo’ and ‘Etsy.’ It’s a law change that those with online businesses or side hustles will need to be ready for.
Grayson Burgess creates and sells movie prop replicas on Etsy.
”I just really like movies and I like superhero movies especially so I’ve always liked making things,” Burgess said. “It kind of just came together and I was able to build a business off of that.”
Burgess has always been over the threshold to receive the 1099-K tax form.
Those online platforms used to only mail the form if the payment reached $20,000 and 200 transactions.
The IRS wanted to drop the threshold to send the form in 2023 to just $600. Feedback from taxpayers, tax experts, and payment processors made it delay the change and move to a tiered transition period.
For the 2024 tax year, the threshold was dropped to 5 thousand dollars. In 2025, it will drop to $2,500 It will finally reach that $600 mark for 2026 and beyond.
“It’s the ones that do Etsy or taking payments from Amazon, resellers and they do payments coming into them, credit cards, Venmo, Paypal,” said Dena Struck, owner of Freedom Tax Service
This tax season the threshold to get this form is lowering. Meaning more people will be filling out the form alongside him.
“In 2024, they switched it down to $5,000. For 2025 it’s $2500 and then in 2026, it’s $600,” Struck said.
It won’t just be small businesses who see this form show up in the mailbox. Nonprofits that use Venmo for donation purposes could also receive the form. It could also be sent to anyone who sells an item as a one-off if it’s over that threshold.
“That’s one thing that they’re trying to figure out, is that going to be classified as an income? And sometimes the IRS goes yes it can,” Struck said.
Burgess believes these changes will make taxes more confusing for the average person and make it worse for small businesses growing in small communities.
Struck recommends keeping track of every income, and every expense and holding onto any recipients you might be questioning.
”There will be a lot more. If they’re not used to seeing it any not expecting it. It depends on when those companies are going to send them out. They’re supposed to send them out probably by the end of January, so January 31,” Struck said.
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Source: More people could see a 1099-K tax form show up this tax season
