Background and IRS Announcement
On November 22nd 2023 the IRS announced it is changing the minimum reporting threshold for 1099-K issuers for tax year 2023 back to $20,000 AND over 200 transactions. Here is a brief history of the recent 1099-K reporting requirement changes:
- Tax years 2021 and earlier: 1099-K is required if the amount paid is over $20,000 AND over 200 transactions
- Tax year 2022: The American Rescue Plan Act of 2021 (ARP) lowered the reporting threshold to $600 and no transaction limit in an attempt to catch tax cheaters
- This frustrated many people because now you could be issued a 1099-K for things like splitting your dinner bill with friends via Venmo, for example
- At the end of the year the IRS issued Notice 2023-10 and reverted the reporting requirements back to $20,000 AND over 200 transactions for tax year 2022 because they didn’t have the resources to process the onslaught of additional 1099-K forms
- Tax year 2023: The reporting requirement was supposed to be $600 and no transaction limit as mandated in the 2021 ARP legislation
- On November 22nd 2023 the IRS announced Notice 2023-74 wherein they announced they will once again delay the implementation of the the new lower limits, so the limit will once again be reverted back to $20,000 AND over 200 transactions for tax year 2023
- Once again they cited lack of resources (an anticipated 45 MILLION new 1099-K submissions!) and also a general poor public approval and perception of the law
So, the current 1099-K threshold for tax year 2023 is now $20,000 AND over 200 transactions.
Very good.
How Does this Affect You as a Turo Host?
You might be asking what 1099-K reporting threshold change should mean to you as a Turo host. A 1099-K is a form used by online payment processors to report income payments to the IRS. If you use digital payments services to send and receive payments (Paypal, Venmo, credit cards, Turo, etc..) the processor is obligated to use the 1099-K form to report how much money they paid you to the IRS. Later when you file your taxes the IRS will compare the number you reported as income to the number the processor says they paid you. If there is a major discrepancy it can lead to an audit.
So, this matters to you because Turo is legally obligated to send you a 1099-K and report your income to the IRS if you are over the reporting threshold. For tax year 2023, Turo will only send you a 1099-K if they paid you over $20,000 AND you had over 200 transactions.
Turo will show your tax summary and 1099 here: https://turo.com/us/en/tax-information
2023 IRS Reporting Requirements for Hosts
Turo is only required to report your income to the IRS via 1099-K if they paid you over $20,000 AND over 200 transactions. However, you as a small business owner are always legally responsible to report ALL of your income to the IRS whether or not Turo sends you a 1099-K. Good bookkeeping and recordkeeping, and a good CPA, will keep you out of hot water!
Happy Thanksgiving!
