Here below some recent updates as you get ready for the 2023 filing season.
Reporting rules changed for Form 1099-K
Form 1099-K, payment card and third-party network transactions should be provided to taxpayers who received third-party payments in the tax year 2022 for goods and services that cost more than $600.
Before 2022, only if each of the following conditions were satisfied was Form 1099-K provided for third-party networks transactions:
More than 200 transactions were made in total.
More than $20,000 worth of transactions were made overall.
These requirements were altered by the American Rescue Plan Act of 2021 (ARPA), which lowered the threshold for reporting for third-party networks that handle payments for persons conducting business.
A single transaction in tax year 2022 that costs more than $600 may necessitate the third-party platform issuing a 1099-K. This move will result in a significant increase in the number of taxpayers who receive 1099-Ks.
As a result of the expiration of several ARPA and pandemic-era credits at the end of 2021, many tax credits have returned to their pre-pandemic levels. The Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit are among the credits that are affected. Many taxpayers will probably receive a return that is much less than they did the prior tax year as a result of these changes.