Tax Pros Express ‘Deep Concerns’ About $600 Threshold as Senators Propose Increase to $10,000

Details

  • Americans have been bracing for a new reporting change for third-party payment networks like Venmo or PayPal.
  • Sens. Bill Hagerty, R-Tenn., and Joe Manchin, D-W.Va., will propose to raise the tax reporting threshold to $10,000 from $600 for 2022. Sen. Bill Hagerty, R-Tenn., will file an amendment to the $1.7 trillion spending package, to increase the threshold for Form 1099-K, according to Sen. Joe Manchin, D-W.Va., the proposal’s lead co-sponsor. The tax reporting threshold applies to transfers using third-party payment networks including Venmo and PayPalBefore 2022, taxpayers received 1099-Ks with more than 200 transactions worth an aggregate above $20,000. But the American Rescue Plan Act of 2021 dropped the threshold to just $600. Currently, even a single transaction of more than $600 may trigger the form.
  • This is the best relief we can get for people,” said Manchin, referencing the $10,000 threshold as “the best way to approach it.”He believes that raising the threshold to $10,000 has broader support than delaying implementation of the new rule. 
  • Tax professionals have flagged the lower tax reporting threshold as a possible pain point for filers, with the risk of receiving 1099-Ks for personal transfers, such as gifts or reimbursements.
  • As tax preparers, we are more or less expecting the worst,” Albert Campo, a certified public accountant and president of AJC Accounting Services in Manalapan, New Jersey, recently told CNBC.
  • We’re expecting most of our clients to get these things,” he said. “So we’re trying to be proactive in addressing it.”
  • The American Institute of CPAs on Friday shared “deep concerns” about the $600 tax reporting threshold in a letter to the Senate Finance Committee and the House Ways and Means Committee.

Comments powered by CComment