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On December 23, 2022, the Internal Revenue Service announced a delay in reporting thresholds for third-party settlement organizations (TPSOs), which was set to commence this upcoming tax season.
This means that companies like Etsy, eBay, PayPal, etc. (TPSOs) will not be required to report tax year 2022 transactions to the IRS or to the payee on a Form 1099-K. Initially, if you had sold items adding up to $600, you would have been issued a Form 1099-K by the companies and you would have had to report it as income on your taxes.
Before the American Rescue Plan of 2021, the reporting threshold was more than 200 transactions per year, exceeding an aggregate amount of $20,000. The American Rescue Plan’s new threshold is $600 per year and a single transaction.
Keep in mind this is merely a delay “to help smooth the transition and ensure clarity for taxpayers, tax professionals and industry.” Hang onto your receipts or scan them, so you’ll have proof of what you purchased in the event you end-up selling them down-the- road. Otherwise, you are going to have to report the full sales amount as income.
