January 3, 2022

Third Party Settlement Organization Reporting Rules Change as of 1/1/2022

The American Rescue Plan Act that passed in March 2021, lowered the reporting threshold for Form 1099K for third-party settlement organizations (TPSOs) for transactions settled after 12/31/2021. That means that the 1099K forms received for 2022 transactions will be furnished to the IRS in early 2023. The IRS will begin matching that information to your 2022 income tax return. Instead of the $20,000/200 transaction threshold, payments for goods and services of $600 are now reportable on Form 1099K. This reporting excludes gifts, charitable contributions, or reimbursements.

TPSOs are your credit cards, PayPal, Venmo and the like. These organizations will request your name, address, and taxpayer identification number to report the gross amount of the reportable payment. Gross reporting does not consider any expenses incurred to earn this income. This threshold change is aimed at individuals who work making deliveries, dog-walking, cleaning houses, babysitting or other services and receive payments through third-party networks. Often this income went unreported by recipients since the threshold was significantly higher.

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