Form 1099 MISC and Form 1099 K reporting is looking to change the thresholds in 2019 tax year. Form 1099 MISC, is used to file miscellaneous income, at present the general threshold of $ 600 with few exceptions. The rules and deadlines for filing 1099 forms are constantly revised every tax year. Here are the few changes for the 2019tax filing season including 1099-MISC and 1099-K forms.
Thresholds Change for Form 1099-K
Form 1099 K is used to file the Third Party Network Transactions and Payment Card and Payment Card. There is a threshold for third party network transactions, which requires reporting if the gross payment exceeds $ 20,000 and if there are more than 200 transactions. This vast threshold forms an interval where many individuals who qualify for either of the requirement do not need to file the forms as they do not intersect or satisfy both the requirements. Though the gap or the interval still exists for the third party network transactions, note that at present there are no limiting thresholds for the payment card transactions.
There are two bills, Senate Bill 1549 otherwise called as “NEW GIG ACT of 2017” and House Bill 3717, otherwise called as “Small Business Owners Tax Simplification Act of 2017” are seeking to change the thresholds for these 1099 forms.
The New Gig Act of 2017 could increase the reporting threshold for Form 1099-MISC from the amount $ 600 to $ 1000, and it could also lower the reporting threshold for Form 1099 K from $ 20,000 to $ 1000. This bill was introduced on the Senate floor in the month of July and now it is in the Senate Finance Committee.
Small Business Owners’ Tax Simplification Act of 2017
According to the Small Business Owners’ Tax Simplification Act of 2017 could increase the reporting threshold for the Form 1099-MISC from the range $ 600 to $ 1500. In addition to that, it could also decrease the reporting threshold for the Form 1099-K from the rage $ 20,000 to $ 1500 and it could remove the transaction threshold reporting requirement.
Contrasting from the NEW GIG Act, the House Bill has bilateral support because it got some cosponsors from both the sides of the aisle as four Republican cosponsors and also two Democrats are cosponsoring the bill. This bill was presented on the House floor in the month of September and it is currently present in the House Ways and Means Committee.
IRS Form 1099-K Threshold
The form 1099-K threshold’s effect could be important as it could form new reporting responsibilities, which could not have existed before and have a big impact on the ride-sharing companies as the drivers are paid indirectly. These companies are taken as third-party networks, referring that they facilitate the driver’s ride-sharing work by finding the passengers and to transfer the payment between the drivers and the passengers. Apart from that, the online sellers use the virtual marketplace and get the payments through online payment processors. This is also considered as a third party network and it could be affected by the decreased 1099-K threshold as well.
IRS Form 1099-MISC Threshold
When comparing with the 1099-K threshold change, the 1099-MISC threshold change could not be as dramatic. But still, it could have a big impact on various companies, which use independent contractors for small projects or situations. Based on the higher threshold, these companies need not report as many independent contractors as they did before.
Provided the impact of these threshold changes, it might have for information to report the requirements, and it is vital to keep a record of this pending legislation.