News & Updates

Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS form that is used to report certain payment transactions.

If taxpayers receive a Form 1099-K, they should use that information with their other tax records to determine their correct tax liability. Taxpayers must report all their income on their tax return unless it's excluded by law, regardless of whether they receive a Form 1099-K.

Taxpayers will receive Form 1099-K for business transactions, including income from:

• A business the taxpayer owns.
• Self-employment.
• Activities in the gig economy.
• The sale of personal items and assets.

Money received as a gift or for reimbursement does not require a 1099-K. Taxpayers can minimize the chance of an error by asking friends or family members to correctly designate that type of payment as a non-business-related transaction. The taxpayer should also make a note of what the payment was for and who sent it. Good recordkeeping is key.

What to do when a Form 1099-K is incorrect

Some taxpayers may have received a Form 1099-K for the sale of personal items, or Form 1099-K may have been issued in error – such as for transactions between friends and family, or expense sharing.

If the information is incorrect on the Form 1099-K, taxpayers should contact the issuer immediately. The issuing organization's name appears in the upper left corner on the form. Taxpayers should keep a copy of all correspondence with the issuer for their records.

If a taxpayer receives a Form 1099-K in error and the taxpayer cannot obtain a corrected Form 1099-K, the taxpayers should follow the IRS' updated guidance at Understanding Your Form 1099-K.

1099-K reporting threshold for tax year 2023

The American Rescue Plan of 2021 changed the reporting threshold requirement for payment apps, also known as third-party settlement organizations. The IRS announced that the new Form 1099-K reporting threshold will start in tax year 2023.

• The old threshold was $20,000 and 200 transactions per year. This applies to tax year 2022 and prior years.
• The new threshold is more than $600. This applies to tax year 2023 and future years.

The threshold change means some people may receive a Form 1099-K who have not received one in the past. There are no changes to what counts as income or how tax is calculated.

‍

Taxpayers who can't pay their tax bill by the April 18, 2023, deadline shouldn't panic. The IRS offers several options to help them meet their obligations.

It's important for taxpayers to file their tax return or request an extension of time to file at IRS.gov/extension by the April 18, 2023, deadline – even if they can't pay their full tax bill. Doing so will help them avoid a failure-to-file penalty.

This extension applies only to the filing deadline, not the payment deadline. Except for eligible victims of recent natural disasters who have until Oct. 16 to make various tax payments, taxpayers who can't pay the full amount of taxes they owe by April 18 should file and pay what they can. Making a payment, even a partial payment, will help limit penalty and interest charges.

For taxpayers who cannot pay in full

Taxpayers struggling to meet their tax obligation may consider these payment options.

Online payment plans

Taxpayers who owe but cannot pay in full by April 18 don't have to wait for a tax bill to set up a payment plan. They can apply for a payment plan at IRS.gov/paymentplan. These plans can be either short- or long-term.

• Short-term payment plan – The payment period is 180 days or less, and the total amount owed is less than $100,000 in combined tax, penalties and interest.
• Long-term payment plan – The payment period is longer than 180 days, paid in monthly payments, and the amount owed is less than $50,000 in combined tax, penalties and interest.

Offers in compromise

An offer in compromise lets taxpayers settle their tax debt for less than the full amount they owe. It may be an option if they can't pay their full tax liability or doing so creates a financial hardship. The IRS considers a taxpayer's unique set of facts and circumstances when deciding whether to accept an offer.

Taxpayers can see if they're eligible and prepare a preliminary proposal with the Offer in Compromise Pre-Qualifier Tool.

The IRS offers penalty relief to eligible taxpayers

Taxpayers may qualify for penalty relief if they tried to comply with tax laws but were unable due to circumstances beyond their control.

Here's what taxpayers should know about possible penalties and interest

Taxpayers who owe tax and don't file on time, may be charged a failure-to-file penalty. This penalty is usually five percent of the tax owed for each month or part of a month that the tax return is late, up to 25 percent. The failure-to-pay penalty applies if a taxpayer doesn't pay the taxes, they report on their tax return by the due date.

Interest is based on the amount of tax owed and for each day it's not paid in full. The interest is compounded daily, so it is assessed on the previous day's balance plus the interest. Interest rates are determined every three months and can vary based on type of tax; for example, individual or business tax liabilities. More information is available on the interest page of IRS.gov.

An extension of time to file is not an extension of time to pay. An extension only gives taxpayers until Oct. 16, 2023, to file their 2022 tax return, but taxes owed are still due April 18, 2023.

‍

With the 2023 tax filing season in full swing, taxpayers should be sure to visit IRS.gov for updated resources and tools to help with their 2022 tax return.

Things to know before filing

• Taxpayers should wait to file until they receive all their proper tax documents, or they risk making a mistake that could cause delays.
• They should also review their income documents carefully. If any of the information is inaccurate or missing, taxpayers should contact the payer right away for a correction or to ensure the issuer has their current mailing or email address.
• Creating an IRS Online Account can help taxpayers securely access information about their federal tax account, including payments, tax records and more.
• Organized tax records make preparing a complete and accurate tax return easier and may help taxpayers find overlooked deductions or credits.
• Taxpayers with an Individual Taxpayer Identification Number or ITIN may need to renew it if it's expired and is needed on a U.S. federal tax return. If they don't renew an expiring or expired ITIN, the IRS can still accept their return, but it may delay processing or credits owed.

Taxpayers should visit IRS.gov for information and answers to common tax questions

• The IRS Interactive Tax Assistant helps taxpayers find answers tax questions based on their specific circumstances. Taxpayers can use it to determine if they must file a tax return, their filing status, if they can claim a dependent, if the type of income they have is taxable, if they're eligible to claim a credit or if they can deduct expenses.
• IRS Tax Topics contain general individual and business tax information. If taxpayers don't find the answers to their question, they can check Frequently Asked Questions.
• The Let Us Help You page lists many other online resources.
• Taxpayers can find IRS forms, instructions and publications they need to file tax return at Forms, Instructions & Publications.
• Once a taxpayer has filed their return, they can track the status of their return with the Where's My Refund? tool at IRS.gov/wheresmyrefund.

‍

Taxpayers who aren't able to file by the April 18, 2023, deadline can request an extension before that deadline, but they should know that an extension to file is not an extension to pay taxes. If they owe taxes, they should pay them before the due date to avoid potential penalties and interest on the amount owed.

Taxpayers who request a six-month extension to file their taxes have until October 16, 2023, to file their 2022 federal income tax return.

How to request a free extension to file for a return with no tax due

Individual taxpayers, regardless of income, can use IRS Free File at IRS.gov/freefile to request an automatic six-month tax-filing extension. Alternatively, taxpayers can file Form 4868, Application for Automatic Extension of Time to File.

How to request an extension when making a payment for a return with taxes due

Taxpayers can choose to submit an electronic payment and select Form 4868 or extension as the payment type. The IRS will count it as an extension automatically, and taxpayers won't need to file Form 4868.

Victims in FEMA disaster areas may have an automatic extension

The IRS may offer an automatic extension to areas designated by the Federal Emergency Management Agency. To check whether an area is included, see Tax Relief in Disaster Situations. Taxpayers in the affected areas do not need to file any extension paperwork, and they do not need to call the IRS to qualify for the extended time.

U.S. citizens and resident aliens abroad and military members in combat zones may have more time to pay

Taxpayers living overseas, including members of the military and eligible support personnel serving in combat zones may also have extra time to file their tax returns and pay any taxes due.

‍

The IRS offers a variety of tax resources and information designed to help members of the military community navigate their unique and sometimes complex tax situations. Reviewing these resources before filing can make completing an accurate tax return easier.

Here are some of these resources.

• Tax Information for Members of the Military is the main page on IRS.gov where people can go to find links to helpful info, resources and services.
  
• A taxpayer's military status affects whether they are eligible for certain benefits. Taxpayers can check their eligibility for military tax benefits by visiting IRS.gov. Qualifying employers include the Armed Forces, uniformed services and support organizations.
  
• The Armed Forces' Tax Guide is a comprehensive IRS publication for military members. It covers:
• Special rules for military personnel serving abroad, including deadline extensions
• Unreimbursed moving expenses
• Reserve component travel expenses
  
• The Department of Defense provides MilTax as a free tax resource for the military community. Those eligible for MilTax include members of the Air Force, Army, Navy, Marines and National Guard. Coast Guard members serving under Title 10 authority are entitled to this resource as well. Retired and honorably discharged members are authorized to use the program for up to 180 days past their separation.
  There are no income limits. This program includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. It's designed to address the realities of military life – including deployments, combat and training pay, housing and rentals and multistate filings. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.
  
• Those who do not qualify for MilTax have other options to prepare and e-file their federal taxes for free online.
  
• Many military installations offer free income tax assistance in-person through the military Volunteer Income Tax Assistance program. Military service members can contact their installation's legal office for details. Veterans may also qualify for free tax help at several locations nationwide if they meet income or age requirements.
  
• Specific rules apply to those who serve in combat zones. These taxpayers and their families can visit the Tax Exclusion for Combat Service page of IRS.gov to learn more. They should also review special rules for the earned income tax credit. If these apply to their tax situation, it could lead to a larger refund.
  
• Information for veterans is available at IRS.gov/veterans. This page has federal tax-related information about tax credits and benefits, free tax preparation, financial education and asset-building opportunities available to veterans.

‍