How does the new form 1099-K effects tax reporting in 2022 in California

Sonny84
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I need to know if I would get a 1099-K form in Jan 2022 for the payments received in 2022 over $600 or is this new law going into practice beginning Jan 2022, meaning I will get it in Jan 2023 for the payments received throughout 2022. Also I'd like to know what is the state law for California regarding this? Thank you!

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PayPal_JonK
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Hello @Sonny84,

 

Welcome! Thanks for visiting our Community Forums, this is a great question. PayPal tracks the total payment volume on your account to determine whether it meets the IRS threshold in a calendar year:

  • $20,000 USD in total payment volume from sales of goods or services in a single calendar year and, 
  • 200 payments for goods or services in the same year.

However, some states report a bit differently than others:  

  • Vermont, Massachusetts, Virginia, Maryland: Have a $600 USD total payment volume threshold from sales of goods or services in a single calendar year. That’s regardless of the number of transactions. 
  • Illinois: Has a $1,000 USD total payment volume threshold of goods or services in a single calendar year. And at least 4 payment transactions. 

If you’ve met the state or IRS threshold in a given calendar year, PayPal will send you a Form 1099-K in January of the following year and submit this form with the IRS in March. Normally, you'll see your 1099-K made available by the end of January. 

 

I hope that clears up some confusion. Have a great day!

 

 - Jon K

 


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PayPal_JonK
Moderator
Moderator

Hello @Sonny84,

 

Welcome! Thanks for visiting our Community Forums, this is a great question. PayPal tracks the total payment volume on your account to determine whether it meets the IRS threshold in a calendar year:

  • $20,000 USD in total payment volume from sales of goods or services in a single calendar year and, 
  • 200 payments for goods or services in the same year.

However, some states report a bit differently than others:  

  • Vermont, Massachusetts, Virginia, Maryland: Have a $600 USD total payment volume threshold from sales of goods or services in a single calendar year. That’s regardless of the number of transactions. 
  • Illinois: Has a $1,000 USD total payment volume threshold of goods or services in a single calendar year. And at least 4 payment transactions. 

If you’ve met the state or IRS threshold in a given calendar year, PayPal will send you a Form 1099-K in January of the following year and submit this form with the IRS in March. Normally, you'll see your 1099-K made available by the end of January. 

 

I hope that clears up some confusion. Have a great day!

 

 - Jon K

 


If you find this or any other post was helpful, make our community better by giving kudos or accepting it as a solution.
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Sonny84
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@PayPal_JonK  Got it, thanks for clarifying that Jon. Appreciate you taking the time to answer my query. 

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CaravanFiber
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Contributor

OK--found the answer, it's in this article & more:  https://www.twrblog.com/2021/03/american-rescue-plan-act-clarifies-scope-of-form-1099-k-reporting-an...

 

Basically, it kicks for sales made in 2022. Instead of the two-part criteria of $20k+200 sales, it's now a flat $600 and up. this means if you sell one item for $600, then you'll have a 1099-K to report on your tax return.  

 

(In my opinion, especially as to when this was signed into effect, I think it's petty of the gov. Someone, especially in resold goods or hand-crafted goods, adding only $600 to their income? Really, what's next a tax on windows*?)

*In case you're not familiar with this, at one point in time England had a tax on windows & people boarded up their windows so they wouldn't have to pay the tax. It was ruled out in 1851.)

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Sonny84
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Contributor

Got it, thank you so much for clarifying that and also for that article @CaravanFiber really appreciate you taking the time!! Well $600 is indeed a low threshold, this is gonna impact a lot of people next year I'm sure.  

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