Now a single transaction exceeding $600 can trigger a 1099-K.
Prior to The American Rescue Plan Act of 2021, Form 1099-K was issued for third-party payment network transactions only if the total number of transactions exceeded 200 for the year and the aggregate amount of these transactions exceeded $20,000.
Now a single transaction exceeding $600 can trigger a 1099-K. The lower information reporting threshold targets lower income taxpayers such as very small businesses or people who have part-time, side jobs or hobby income.
Some people may receive a 1099-K reporting for money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses. This of course is not taxable, but you will have to contact the issuer of the 1099-K to withdraw it. The IRS cannot correct it.
If you are unable to get the issuer to correct it, we can report it on your tax return and then back it out with an explanation that it was reported in error. If you have hobby income that actually resulted in a loss, you will still have to report the 1099-K.
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