- Important update for online payment processors
- Don't get caught off guard - stay up to date on the latest tax rules
- Read our article to learn more
The Internal Revenue Service (IRS) recently announced a postponement to the introduction of its $600 threshold for filing out a Form 1099-K. The form is used to report transactions made through services such as eBay, PayPal, Venmo, Etsy, and third-party settlement organizations. This threshold was scheduled to take effect in the New Year and would have resulted in millions of new forms being sent to unwitting taxpayers and their accountants.
The new rule would have required businesses that process more than 200 transaction with recipients totaling over $20,000 annually to issue these forms to entities receiving payment. Furthermore, there would be an additional requirement for companies processing more than 20,000 transactions that totaled over $600 each year for any given recipient to fill out the form as well.
While this change might seem minor, it had the potential to cause serious headaches for many small businesses throughout the US. Not only would they need to spend time filling out extra paperwork each time they make payments or receive them from customers, but they would also be responsible for ensuring that their clients' information is up-to-date and accurate when doing so. It could lead to costly fines and fees if mistakes were made regarding tax filing documents.
Fortunately, due to overwhelming opposition from small business owners across the nation, the IRS has decided against implementing this policy at this time. They are instead encouraging those affected by it to provide feedback on how it might be improved so that it can better suit their needs before it is reintroduced in the future.
In light of this news, entrepreneurs should keep in mind that while there is some relief now when it comes to filing out taxes accurately and on time; there may still be changes coming down the pipeline in regards to 1099-K reporting in 2021. This means that even though businesses may not need to worry about compliance right away, they should still begin implementing processes now which will prepare them for any new rules or regulations next year.
It’s also important not just focus solely on your own business’s financial obligations when filing taxes; but also consider what you may owe your employees as well. Some employers are adding additional perks such as bonuses or benefits during tax season in order to show appreciation for their staff's hard work throughout the year; however don't forget about withholding taxable income too! Make sure you know exactly how much money you'll need set aside come April so you can file without issue later down the line.
Overall, while no one knows exactly what changes or updates will come from the IRS yet - we do know one thing: business owners must stay informed about new policies and procedures related tax filings and ensure compliance with current regulations in order avoid discrepancies further down line.