With the 2023 tax filing season beginning for “early filers” who typically file a tax return during the month of January or early February, the Internal Revenue Service, IRS has said “there’s no change to the taxability of income.”
“All income, including from part-time work, side jobs or the sale of goods is still taxable,” the IRS said in a second reminder of its “Get Ready” page outlining steps taxpayers can take now to make tax filing easier in 2023.
“Taxpayers must report all income on their tax return unless it’s excluded by law, whether they receive a Form 1099-K, a Form 1099-NEC, Nonemployee Compensation, or any other information return.”
The IRS said that “reporting rules changed for Form 1099-K. Taxpayers should receive Form 1099-K, Payment Card and Third Party Network Transactions, by January 31, 2023, if they received third party payments in tax year 2022 for goods and services that exceeded $600.”
“Prior to 2022, Form 1099-K was issued for third party networks transactions only if the total number of transactions exceeded 200 for the year and the aggregate amount of these transactions exceeded $20,000.”
“The American Rescue Plan Act of 2021 lowered the reporting threshold for third party networks that process payments for those doing business.
Now a single transaction exceeding $600 can require the third party platform to issue a 1099-K. Money received through third party payment networks from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.”
Meanwhile, IRS-certified tax preparer and the Chief Executive Officer of Evergreen Insurance Agency and Financial Services, Sanmi Fatoba has advised that “it is important to use IRS-certified tax preparer to avoid errors in filing.
“The main purpose of filing your tax is to zero out the previous financial year before starting the new one. If you owe the government, you pay the government; if the government owes you, you get a refund. Not everybody gets a refund. It is like balancing the previous account before moving to a new one. It is not time to get money from the government; that is a misconception. It is completely wrong.”