Transcript for Taxes made easy: Breaking down form 1099-K
- A new tax form may be coming to your mailbox soon. Form 1099-K is used to report payments from third party network providers, and you might receive one this year. Fortunately we're here to help you understand this new form and what it means to your tax return.
NARRATOR: As a part of the American Rescue Plan, third party payment providers like PayPal and Venmo were required to issue Form 1099-K to individuals who use their platform and receive $600 or more in payment transactions for goods and services. But back in December of 2022, the IRS delayed that rule change until 2023. With such a last-minute change, however, some of those payment platforms may still send out form 1099-K to recipients who meet the required qualifications. If you see one of these forms arrive in your mailbox, you'll need to determine how to report that income on your return.
- This is not a new tax. Receiving form 1099-K does not mean you automatically owe tax on the amount reported on the form. Form 1099-K shows the gross payment received, but you're only taxed on your net income, otherwise known as your profit. So if you've got a loss or if you have a qualifying expense to deduct, you're not responsible to pay income taxes on that full amount.
If you choose to file with TaxAct, our product asks detailed questions about your 1099-K to help you navigate the change. And better yet, you can get assistance from real, live tax experts using TaxAct Xpert Assist to help you file with confidence. Our team of tax experts are ready to answer your questions no matter how big or how small.
This transcript has been automatically generated and may not be 100% accurate.