Sen. Bill Hagerty, R-Tenn., listens to testimony during the Senate Banking, Housing, and Urban Affairs hearing to consider the President’s Financial Markets Task Force Report on Stablecoins in Washington, D.C. on February 15, 2022.
Bill O’Leary | Swimming pool | Reuters
Sen. Bill Hagerty, R-Tenn., will table an amendment to the $1.7 trillion spending programto increase the threshold of Form 1099-Kaccording to Sen. Joe Manchin, DW.Va., the proposal’s co-lead sponsor.
The tax reporting threshold applies to transfers using third-party payment networks, including Venmo and PayPal.
In an exclusive interview with CNBC, Manchin said the amendment would raise the payout threshold to $10,000 from $600 for the 2022 tax season.
Prior to 2022, taxpayers received 1099-Ks with over 200 transactions with a total value over $20,000. But the American Rescue Plan Act of 2021 lowered the threshold to just $600. Currently, even a single transaction over $600 can trigger the form.
“It’s the best relief we can get for people,” Manchin said, referring to the $10,000 threshold as “the best way to approach it.”
He thinks raising the threshold to $10,000 has broader support than delaying the implementation of the new rule.
Tax experts have ‘deep concerns’ over $600 threshold
Tax professionals have flagged the lower tax filing threshold as a possible problem for filers, with the risk of receiving 1099-K for personal transferssuch as gifts or refunds.
“As tax preparers, we more or less expect the worst,” Albert Campo, a certified public accountant and president of AJC Accounting Services in Manalapan, New Jersey, told CNBC recently.
“We expect most of our customers to get these things,” he said. “So we’re trying to be proactive about addressing that.”
The American Institute of CPAs shared “deep concerns” about the $600 tax filing threshold on Friday. in a letter the Senate Finance Committee and the House Ways and Means Committee.
The trade group said it supports a foundation of the National Taxpayers Union recommendation to raise the threshold to “a level sufficient to exempt occasional or low-level online activity”.
The AICPA said even a $5,000 threshold would be “significant progress.”