Following feedback from the tax community, the IRS is also looking to make updates to the Form 1040 and related schedules for 2024 that would make the reporting process easier for taxpayers.
“Changes to the Form 1040 series — the core tax form for more than 150 million taxpayers — are complex and take time,” the IRS says. “Delaying changes to tax year 2024 allows for additional feedback.”
Commenting on the new notice, IRS Commissioner Danny Werfel says taking this phased-in approach is “the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040.”
Under the new ruleset, reporting requirements do not apply to personal transactions such as birthday or holiday gifts, sharing the cost of a car ride or meal, or paying a family member or another for a household bill. These payments are not taxable and should not be reported on Form 1099-K.
However, the “casual sale of goods and services,” including selling used personal items like clothing, furniture and other household items for a loss, could generate a Form 1099-K for many people, even if the seller has no tax liability from those sales.
According to Werfel’s statement, the complexity in distinguishing between these types of transactions factored into the IRS decision to delay the reporting requirements an additional year and to plan for a threshold of $5,000 for 2024 in order to phase in implementation.