Current Form 1099-K Reporting Thresholds

Tax laws can change from year to year, and you shouldn’t have to be a tax expert to understand IRS requirements that may impact you. That’s where PayPal comes in! As a payment settlement entity, PayPal is required to report payment activity and provide tax documents in certain situations. Read on to learn about this year’s reporting requirements.

What is the 2023 Form 1099-K IRS tax reporting threshold on PayPal?

The IRS has recently announced an additional delay in implementing the new $600 USD reporting threshold for goods and services transactions, reverting the 2023 requirement for Form 1099-K reporting back to the 2022 figures (total payments exceed $20,000 USD and there are more than 200 transactions). This means that similar to prior years, PayPal and Venmo will continue to follow these IRS reporting thresholds. Additionally, PayPal and Venmo will file Form 1099-K for any customer who was subject to backup withholding during 2023, regardless of total payments for the year. In the case where an individual state has a lower threshold, PayPal and Venmo will report accordingly.

If you live in the following US states, you’re subject to a lower reporting threshold:

Vermont, Massachusetts, Virginia, Maryland: $600 USD in gross payment volume from sales of goods or services in a single calendar year, regardless of the number of transactions.
Illinois: over $1,000 USD in gross payment volume from sales of goods or services in a single calendar year and four or more separate transactions.

The Form 1099-K that you receive is based on your primary address on the last day of the previous tax year. If you changed your primary address to one of these states after that date, your account activity would be captured in Form 1099-K reporting for the following tax year.

PayPal doesn’t provide tax advice. For questions regarding your specific circumstances, you should consult your tax adviser.

What if PayPal already sent some of my money to the IRS because of backup withholding?

PayPal withheld money from certain accounts that were missing tax information at a rate of 24 percent, as required by the IRS. We will issue customers a Form 1099-K and they will be able to claim a credit or refund of the backup withholding when they file their own taxes with the IRS. For more information, visit the IRS website here and here.