If you’re one of the millions of people who use a digital payment service and you received or made payments through it for part-time work or goods and services, you’ll need a new tax form.
People whose payments exceed $20,000 and have more than 200 transactions for the year will receive a 1099-K form in the mail from payment card companies, according to the IRS.
“A payment app or online marketplace is required to send you a Form 1099-K if the payments you received for goods or services total over $20,000 in more than 200 transactions,” the agency noted on its website. “However, they may send you a Form 1099-K with lower amounts and/or transactions.”
The IRS noted that despite the money and transaction limit for the 1099-K to be sent out taxpayers “must report all income on your tax return. This includes payments for any goods you sell (including personal items such as clothing or furniture sold at a gain) or services you provide.”
However, if you use digital payment apps to transfer money to friends or family as a gift or to repay a personal expense, you don’t need to report it because it isn’t taxable income.
You can read more about the 1099-K and see frequently asked questions on the IRS website.