Small Business Tax Savings Podcast IRS's $600 Tax Rule Postponed: What It Means for Venmo, Cash App & PayPal Users in 2024
What if you discovered that by embracing the new e-filing changes and understanding the nuances of the 1099 NEC, 1099-MISC, and 1099-K forms, you could not only streamline your tax processes but also potentially uncover hidden financial benefits for your business?
In this episode, Mike welcomes Christina Wright to discuss the IRS 600 1099-k tax rule and its recent postponement. They also discuss the changes in e-filing, covering the difference between 1099-NECs and 1099-MISCs, their uses, and their dues. The conversation revolves around the importance of adhering to tax rules to avoid penalties and the implications of the new 1099k rule for transactions made using cards or payment apps. They also cover the future outlook of this threshold for tax year 2024.
Tune in to learn more about the impact of newly-imposed e-filing changes and the recommended practices in choosing provisions for e-file providers!
[00:00 - 04:22] Understanding 1099s and Their Importance
- Christina highlights the 1099 NEC (Non-Employee Compensation) form, used for reporting payments to freelancers or contractors over $600.
- The 1099 Miscellaneous form reports various types of payments such as rents and awards.
[04:22 - 11:22] Understanding 1099-k and Its Implications
- Christina discusses the process of filing 1099 forms and the complexities involved.
- Historically, the 1099-k had a high threshold for reporting ($20,000 and 200 transactions), but the IRS considered lowering this to include smaller transactions.
- For the 2022 tax year, the IRS planned to lower the 1099-K threshold to $600, regardless of transaction count.
- However, the IRS postponed this change to the 2023 tax year, and then again delayed it.
[11:22 - 18:05] E-filing Changes for 2023 Returns
- Christina discusses the significant e-filing changes for the 2023 tax year.
- She also shares the challenges of e-filing independently and the advantages of using a provider like Tax Bandits, which specializes in e-filing forms all year round.
- Key considerations when choosing an e-file provider include their ability to support the volume of forms, provide necessary forms and corrections, offer team coordination features, and deliver strong customer support.
[18:05 - 19:59] Conclusion and Final Thoughts
Quotes:
"The e-file threshold has been reduced from 250 forms to 10 forms... It's a huge change, it's a big reduction and it's going to affect a lot of businesses, even the smallest businesses." - Christina Wright
"E-filing... makes everything easier and it's cost-effective. It's not something that's going to break the bank."- Mike Jesowshek, CPA
Connect with Christina Wright!
Email: christina@spanenterprises.com
TaxBandits: https://www.taxbandits.com
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com