Starting in 2024, the threshold for reporting business payments from digital payment platforms will change from $20,000 to $5,000.
In previous years, including 2023, there was a threshold that if a business receives payments through platforms such as PayPal and Venmo, they have to report that income if there were over 200 transactions and above a total limit of $20,000 in that year. In 2021, the IRS announced that it would change that limit to $600, but it’s delaying that change partially due to “feedback from taxpayers, tax professionals, and payment processors and to reduce taxpayer confusion.”
In 2024, the IRS has made the limit $5,000, and then it will change to $600 in 2025. The agency does highlight, though, that regardless of the amount, all income is taxable unless excluded by law.
For entities that do surpass that threshold, they will have to use a 1099-K to file that income. The form can be sent to any entity that uses payment apps or online marketplaces that accepts payments for selling goods or services.
Those who have sold goods or services but at a loss within a year may not be counted as those owing taxable income, but will likely still have to be filed if the income surpasses the appropriate threshold.