Independent contractors will be required to document online income that exceeds $600 in a single transaction starting next year, the IRS said Tuesday.
New rules from the IRS that will go into effect in 2023 will require income earned through online portals like Uber, Etsy, DoorDash, and Airbnb that exceed $600 in one transaction to be reported to the government on a 1099 form for tax purposes. Next year’s changes mark a stark contrast from previous years, as independent contractors who completed more than 200 transactions through online portals or made more than $20,000 in a year through online platforms were required to report the money on the 1099 tax form.
“The IRS cautions people … who may be receiving a Form 1099 for the first time — especially ‘early filers’ who typically file a tax return during the month of January or early February — to be careful and make sure they have all of their key income documents before submitting a tax return,” the IRS said. “A little extra caution could save people additional time and effort related to filing an amended tax return.”
ILLINOIS DRIVERS CAN EXPECT TWO GAS TAX INCREASES IN 2023
The new rules from the IRS could affect millions of taxpayers, as nearly 1 in 4 people have made money through the gig economy. Some of the alternative forms of income that could be affected by these rules include that sourced from selling things online, renting their homes, or using a digital platform as a side job, according to Pew Research.
Gig workers who receive the 1099 form can deduct some costs from their taxes as business expenses. These include some of the costs of gas, car maintenance, and even cellphone bills for those who drive for Lyft or DoorDash, as long as there are documents, such as receipts or bills, to prove the costs. Those who sell items online can document how much they initially paid for an item through receipts and write off storage costs, tax experts told CBS News.
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The government is experiencing pushback from a coalition of companies, such as Airbnb, eBay, Etsy, PayPal, and Poshmark, dubbed the Coalition for 1099-K Fairness, which is lobbying for Congress to relax the $600 reporting rule. Members of the House of Representatives in November also asked the IRS to delay the reporting rule for one more year, but it is unclear if a delay would be approved with just a few weeks left in the session.
