IRS hits the pause button on the digital payment reporting rule change for small businesses and side hustles.

Hey fellow tax enthusiasts!

Here's the scoop: For the second year running, the IRS is hitting pause on rolling out a rule change that would shake things up for tax filers receiving business income through payment apps and online marketplaces like Venmo, CashApp, Etsy, and Airbnb.

This delay could have meant a whopping 44 million more 1099-K forms hitting mailboxes in January. Imagine the frenzy for small business owners, freelancers, side hustlers, and gig workers!

Why the delay, you ask? Well, the IRS is all about keeping things user-friendly. Commissioner Danny Werfel shared, "We want to make this as easy as possible for taxpayers." They've been in deep discussions, gathering feedback from third-party groups and the tax pro community to ensure a smooth transition.

Now, let's dive into what this means for your 2023 taxes. The existing reporting rule is still the star of the show. Third-party payment platforms, those wizards of transactions, report your gross business income to you and the IRS in January if you've had over 200 business transactions and raked in more than $20,000. Remember, we're talking about payments for goods or services, not your buddy chipping in for dinner or your kid covering their expenses. And if, by chance, you find a 1099-K in your mailbox in error, fear not! Check out the IRS page for a quick guide on setting things straight.

Now, here's the tea for 2024: The IRS has decided to take it slow and steady. Instead of the originally planned $600 threshold, they're phasing in the change. Come tax year 2024, third-party platforms will only issue a 1099-K if your business transactions soar past $5,000. The IRS assures us that this approach gives them time to iron out kinks and address concerns from taxpayers and stakeholders.

Big shoutout to the Electronic Transactions Association (ETA) for championing a higher threshold. ETA spokesperson Scott Talbott says, "We applaud this." It's a win for those who pushed for a smoother transition.

Quick reminder: Whether there's a delay or a rule change, your tax obligations remain steady. Reporting your business income to the IRS has always been part of the tax game. The only difference with the rule change is that the IRS will be getting the scoop from third-party payment platforms, making it harder for anyone to play hide-and-seek with their taxes.

Stay tuned for more updates on this tax rollercoaster! 🎢💼💰