For the tax year 2023, there have been many notable IRS updates affecting Forms 1099-K, W-9, and the new 1099-DA, along with changes to electronic filing requirements. Key highlights include the postponed $600 threshold for 1099-K, revisions to W-9, the debut of 1099-DA for digital assets, and a lowered threshold for mandatory electronic filing. This article outlines these critical changes, offering insights for taxpayers and professionals to stay compliant with the evolving tax landscape.
Delay of Form 1099-K $600 Reporting Threshold
According to Notice 2023-74, released on November 21, 2023, the IRS has delayed the Form 1099-K reporting threshold for another year. This is in response to feedback from taxpayers, tax professionals, and other affected individuals. The delay is intended to reduce confusion and allow for a longer transition period.
IRS Form 1099-K is used to report Payment Card and Third Party Network Transactions. Payment settlement entities (PSE) must file a Form 1099-K for certain reportable payments made each calendar year.
The IRS plans to reduce the reporting threshold for Form 1099-K to $600 by tax year 2025. Given the complexity of this task, the IRS will use tax year 2023 as an additional transition year to phase into implementation of the $600 reporting threshold that was enacted under the American Rescue Plan (ARP).
The phases of the transition are currently as follows:
| Tax Year | Reporting Threshold |
| 2023 | Reporting required if the taxpayer receives over $20,000 and has more than 200 transactions during the calendar year. |
| 2024 | Reporting required if the taxpayer receives over $5,000 during the calendar year. |
| 2025 | Reporting required if the taxpayer receives over $600 during the calendar year. |
Please note: Reporting requirements do not apply to personal transactions. Personal transactions include birthday or holiday gifts, splitting household bill costs, sharing the cost of a car ride or a meal, etc. These types of transactions are not taxable and, therefore, should not be reported on a Form 1099-K.
IRS Updates for Form W-9
Earlier in the month, the IRS released a draft version of Form W-9 and its instructions. There have been quite a few changes. These are:
- Line 3b – A new line has been added for partnerships, trusts, or estates to indicate if they have foreign partners, owners, or beneficiaries.
- Updates to withholding and reporting under sections 1446(a) and (f) starting in 2023 – These sections added new rules for withholding on the transfer of a partnership interest. There are now certain provisions which may apply to transfers made after 2022.
- Update to qualified intermediary (QI) agreement – The original QI agreement expired at the end of 2022. New QI guidance was published and effective beginning January 1, 2023.
New IRS Form 1099-DA, Digital Assets
The IRS released proposed regulations that would require brokers to report customer transactions involving sales and exchanges of digital assets, some of which are referred to as virtual currency or cryptocurrency.
These proposed regulations discuss a range of digital asset issues, such as defining brokers and requiring amounts to be reported on a new IRS Form – Form 1099-DA, Digital Assets. They are designed to help end confusion around digital assets and provide information and reporting certainty for taxpayers and other affected entities.
10 Form Count Threshold
At the beginning of 2023, the IRS released final regulations regarding the paper filing form count threshold. The regulations have substantially lowered the threshold for paper filing form counts. Previously, the rule was that filers with 250 or more of a single form type had to submit electronically.
Starting January 1, 2024, this threshold is reduced to just 10 forms in aggregate. In other words, filers with 10 or more forms in total will now be mandated to file electronically.
Filers must find the sum of the following form types to determine if they must electronically file:
- Form 1042-S
- Form 1094 series
- Form 1095-B
- Form 1095-C
- Form 1097-BTC
- Form 1098
- Form 1098-C
- Form 1098-E
- Form 1098-Q
- Form 1098-T
- Form 1099 series
- Form 3921
- Form 3922
- Form 5498 series
- Form 8027
- Forms W-2
- Form W-2G
Conclusion / Wrap Up
In summary, the IRS updates for 2023, including the delayed $600 threshold for Form 1099-K, revisions to Form W-9, the introduction of Form 1099-DA for digital assets, and the lowered electronic filing threshold, represent significant shifts in tax reporting requirements. Taxpayers and professionals should note these changes to ensure compliance and efficient filing.
We have many other resources to help you stay up-to-date on the latest tax news. Check out our Essential Guides to master all of your filing requirements, and always review deadlines to ensure that you’re one step ahead!
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.
About Author
