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B_littleprincess
Level 1

What qualifies for a 1099k?

Hello,

What would qualify someone for a 1099k? Are there particular criteria for that or no? 

How do payment apps not only affect your taxes but also your income (i.e. are there income limits that the IRS caps)?

 

For some on social security disability  not retirement benefits with a gig.  How will their income and medical benefits be affected and how much do you need to pay into it? 

How does gig economy positions affect your investments such as (i.e. 401k,403b,Roth Ira etc?

 

What tax penalties are affected if you touch the gig monies  put into your investment accounts?

Can gig economic positions affect your ABLE Account 529 plan? And can the federal government touch that money even though its for your housing necessities?

 

4 Replies
Irish22_CPA
Employee Tax Expert

What qualifies for a 1099k?

If you receive $600 or more payments for goods and services through a third-party payment network, such as Venmo, or CashApp, these payments will now be reported to the IRS on Form 1099K. 

Beginning Jan. 1, 2022, third-party payment network providers will be required to send users a Form 1099-K, Payment Card, and Third Party Network Transactions for transactions made during the 2022 tax year by mail or electronically. The new tax reporting requirement will impact 2022 tax returns filed in 2023. And while this rule applies to most third-party payment networks, Zelle said it’s not subject to this law.

While this new law requires new tax reporting requirements, it does not change the existing tax law, meaning taxable or nontaxable for tax reporting.

Form 1099-K is an informational tax form and may include amounts considered excluded from gross income for tax purposes.
If you receive money considered a nontaxable source, you will not need to report on your tax return.

Some examples of money received that may be excluded from your income are:

  • Money received from a friend as a reimbursement
  • Money received from a roommate to pay their share of the rent
  • Money received from a loved one as a gift
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LaunieR_EA101
Employee Tax Expert

What qualifies for a 1099k?

"Form 1099-K tracks payments you’ve received through a payment settlement entity, or PSE. That includes tracking payments made via:

  • Credit cards
  • Online payment services like PayPal
  • And even freelancing platforms like Upwork that manage client payments for you.

Form 1099-K shows the value of the transactions the PSE has processed for you in the past year, as well as any expenses paid on your behalf by your clients.

The IRS requires each payment settlement entity to send you a Form 1099-K by January 31 to business and individuals that surpassed the threshold for the year. For tax years prior to 2022, the threshold is payments totaling at least $20,000 and at least 200 transactions. For tax years starting with 2022 and going forward the threshold is simply $600 in payments without any consideration to the number of transactions."  https://turbotax.intuit.com/tax-tips/irs-tax-forms/form-1099-k-decoded-for-the-self-employed/L6xHSTX...

 

GIG income is generally considered self employment income. This can increase your income and impact your taxable portion of social security or cause a higher tax rate on other income from sources like retirement. It just depends on your total taxable income for the year. 

This is a great resource when reporting gig income and expenses https://turbotax.intuit.com/tax-tips/self-employment-taxes/-what-is-a-schedule-c-irs-form/L7v0iDelI .

 

Your state may limit the amount that can be contributed to an ABLE account if you have higher income over $235,000. According to the IRS ABLE distributions aren't taxable unless the distribution exceeds a designated beneficiary's qualified disability expenses. https://www.irs.gov/pub/irs-pdf/p907.pdf

 

 

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Irish22_CPA
Employee Tax Expert

What qualifies for a 1099k?

What Are the Income Limits in Order to Not Qualify for Social Security Benefits?

Because Social Security handles so many unique situations, there are many facets to this question. To answer it, we will start with the basic numbers and explore the exceptions/details from there.

Keep in mind that your situation may be unique, as not all income is evaluated by the SSA. Some forms as income, such as child support, will not count against your total monthly earned income.

To qualify for SSDI, you must earn less than $1,350 per month.

 

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Irish22_CPA
Employee Tax Expert

What qualifies for a 1099k?

How does gig economy positions affect your investments such as (i.e. 401k,403b,Roth Ira etc?) :  Gig economy income would be treated as earned income, and thus subject to the same retirement investment opportunities and limitations as all other earned income.

 

What tax penalties are affected if you touch the gig monies  put into your investment accounts? : Again, gig economy income is treated as earned income, and treated the same as any other earned income placed in investment accounts.  Investments sold in non retirement accounts are taxed at capital gain rates. If placed in a retirement account, then early retirement withdraw penalties would apply, depending on the type of retirement account.

 

 

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