IRS Notice 2024-85
The IRS is providing transition relief for third-party settlement organizations (TPSOs), also known as payment apps and online marketplaces (e.g., Venmo, Amazon, etc.), regarding transactions during calendar years 2024 and 2025.
According to the IRS’s latest guidance, TPSOs must file 1099-Ks to report transactions when the amount of total payments for those transactions is more than:
- $5,000 in 2024;
- $2,500 in 2025; and
- $600 in calendar year 2026 and after.
Client suggestion: Be sure that your business Venmo, Amazon, Zelle, Applepay etc are used ONLY for business transactions. If you receive a Form 1099-K with personal amounts (e.g. your kids reimburse you for vacation money), it’s important that you present it so we can reconcile it on your individual return.
We predict that this will cause a HUGE MESS for the filing period starting January 2024. IRS.gov states that if in error, you should contact the issuing company (e.g. Venmo) and have them correct it… but with millions of potential errors, they are not likely to do so.
IRS.gov has instructions if you can’t get the Form 1099-K corrected:
- Enter the incorrect amount as “other income” on line 8z of Form 1040.
- Enter the offsetting amount as “other adjustments” on line 24z of Form 1040
- The two amounts will offset and the computer will locate the original amount.
