IRS Delays Tax Document

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By Kelley R. Taylor From Kiplinger’s Personal Finance

Q: I Have a Side Job and I’m Paid via Venmo. Will I Be Getting a 1099-K Form to Report This Income on My Tax Return?

Answer: Not yet. At the end of 2022, the IRS delayed implementation of the so-called $600 rule, which had caused a lot of confusion. That rule would have meant people with small businesses, side hustles or part-time jobs and who were paid at least $600 for goods and services through a third-party network (think PayPal, Square, Venmo, Stripe, etc.), would have received a Form 1099-K in January.

The one-year delay comes after lawmakers and advocacy groups expressed concern that millions of taxpayers would unexpectedly receive 1099-K forms and that some businesses and the IRS might not have been prepared for the onslaught of new reporting.

Although the $600 rule has been delayed, you might still receive a 2022 1099-K. If you do receive a 1099-K, make sure that it matches the information that you have in your records. If there are any problems with your 1099-K, contact the third-party payment network that sent the form.

And remember, whether you receive a 1099-K or not, the IRS expects you to report all taxable income on your federal income tax return.

Q: Last Year, I Got a Big Tax Refund. Can I Expect the Same This Year?

Answer: Maybe not. The IRS is warning that some taxpayers may have lower tax refunds in 2023 due to 2022 tax changes.

For example, the enhanced Child Tax Credit is gone. The Child Tax Credit had been expanded in 2021 from $2,000 per child to $3,600 per child and some of the credit was paid out in advance payments during 2021. Since the Child Tax Credit returned to $2,000 per child, the amount that many parents can claim for 2022 will be lower. For some, that means a smaller tax refund in 2023—if any.

Also, for 2022, the standard deduction is higher, which means it will be harder for some people to claim charitable deductions, which is a common way to reduce tax liability. (If you take the standard deduction, the above the line $600 charitable donation tax deduction that was available during the pandemic, is not available for 2022.)

(Kelley R. Taylor is tax editor at Kiplinger.com. For more on this and similar money topics, visit Kiplinger.com.)

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