How to Handle a 1099-K for Personal Payments

Venmo and PayPal Tax Reporting Change

Many Americans are bracing for a new reporting change for third-party payment networks like Venmo or PayPal. Starting in 2022, you’ll receive Form 1099-K, which reports income to the IRS, for business transfers over $600.

If you receive a 1099-K for business transfers, you’ll also report that income, along with possible deductions on Schedule C.

We’re trying to be proactive in educating our clients ahead of time, so it doesn’t catch them by surprise by the IRS,” says Daniel Ahart, chief tax officer at the tax preparation company Daniel Ahart Tax Service®

What To Do If You Receive 1099-Ks For Personal Payments By Mistake

The IRS says the reporting change does not apply to personal transfers, such as gifts or reimbursements between friends and family. However, the agency explains what to do if you’ve received a 1099-K in error. 

However, if you believe the information on Form 1099-K, Payment Card and Third Party Network Transactions, is incorrect, the form has been issued in error, or you have a question relating to the form, contact the filer, whose name and contact information appears in the upper left corner on the front of the form. 

File your 1099 Forms With Daniel Ahart Tax Service

Three things you need to know about how and when to file your 1099 forms

• #1 Penalties. The IRS can assess up to $550 per form for not filing your contractor 1099 Forms.
• #2 Denied Deductions. The IRS can deny your deduction for subcontractor expenses if you don’t have proof of the expense.
• #3 1099 forms are due January 31st!

Some Strategies You Can Use To Prepare To File Taxes Each Year

• Talk to your accountant about a tax checkup for year 2023 – Learn if you’re on track and may uncover ways to save over the next months.
• Gather and organize your tax records – Organized tax records make preparing a complete and accurate tax return easier.
• Check your Individual Tax Identification Number (ITIN) – An ITIN only needs to be renewed if it has expired and is needed on a U.S. federal tax return.
• Make sure you’ve withheld enough tax – Consider adjusting your withholding if you owed taxes or received a large refund last year.
• Get banked to speed tax refunds with direct deposit – Direct deposit gives you access to your refund faster than a paper check.

Get The Help You Need When You Are Ready To File

Daniel Ahart Tax Service® prepares all tax returns, helps solve tax problems, and prepares back taxes. 22 Area Locations in Georgia.

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