Gig workers: What to know about 1099-K changes

The Street

Some gig workers get a 1099-K in the mail. CPA and TurboTax Expert Miguel Burgos explains what the form is, who gets it and how it affects your taxes.

Transcript

00:00Well, there are a ton of gig

00:07workers out there these days,

00:08and don't think they get off

00:10scot-free from filing tax

00:12returns, just because they live

00:13a very simple life. In some

00:15instances, the IRS still wants

00:17their cut. CPA and TurboTax

00:19expert Miguel Burgos is here

00:21with us right now to talk about

00:22this. All right. So the first

00:23thing these people need to know

00:24is that they're going to

00:25receive a different form in the

00:26mail, and it's called the 1099

00:28K. Who gets this?

00:31Well, Tracy, the 1099 K, it's a

00:33form that will be received by

00:35those taxpayers that had

00:38received payments to third

00:39party payment processors. So

00:42that means people that receive

00:43payments through mobile apps or

00:45through credit and debit cards.

00:47It's now with the shared

00:49economy, we see more and more

00:50people using this kind of

00:51payments. And also, we see more

00:55and more people that with the

00:56new thresholds will be likely

00:57to receive a form 1099 K.

00:59Right. And so what are the new

01:00thresholds? Because they were

01:01higher at one point, weren't

01:02they?

01:03Correct. Well, to be honest,

01:04Tracy, during the last, I would

01:06say two or three years, we've

01:07seen the IRS going up and down

01:09with the threshold and trying to

01:10help the taxpayers with the

01:11transition. Previous tax year,

01:14the filing threshold was $20,000

01:17and 200 transactions. So once

01:20they surpassed the $20,000 and

01:22had over 200 transactions, the

01:24IRS would require this third

01:26party payment processing

01:27companies to send the 1099 K

01:30form. Now for this year, 2024

01:34that we're filing now in 2025,

01:36it's once you go over $5,000,

01:38regardless of the amount of

01:40transactions, you are very

01:42likely to receive for 1099 K. It

01:44is also likely the IRS has

01:46announced that that amount, the

01:47threshold will keep going down

01:49for the next couple of years,

01:51down to $600. But for this

01:532024 tax year filed on 2025,

01:57it's once you hit more than

01:59$5,000, you're very likely to

02:01get that form 1099 K if you

02:03receive payments through debit

02:04cards, credit cards, or mobile

02:07apps.

02:08Right. Okay. So when these

02:10people receive these forms, what

02:12do they actually do with them?

02:13And we don't want them to panic

02:15or anything like, so they have

02:17to report something clearly.

02:19Correct. And something to

02:20remember is that 1099 K it's

02:23considered an informational

02:24return, which means, you know,

02:27it's a measure that the IRS has

02:29in place to monitor how the

02:32funds are being transferred and

02:33how can taxpayers that are

02:35mostly self-employed or that,

02:37that, uh, has their own

02:38business can potentially be

02:40generating any sort of income.

02:42So remember, let's say for

02:44example, that a taxpayer gets a

02:461099 K reporting $6,000 that

02:49were paid through how any of

02:50this mobile apps or credit or

02:52debit card, it doesn't mean

02:54that your business has exactly

02:56$6,000 worth of income, but it

02:58gives you a general idea and it

03:00gives the IRS a general idea.

03:02What are they looking for when

03:03they look into how much income

03:05your business had? So although

03:07you might get this or some

03:08taxpayers perhaps had less than

03:10$5,000 and don't get a 1099 K

03:13still is your responsibility to

03:15figure out, to keep track of

03:16your income and expenses

03:18throughout the year and report

03:20them accurately while keeping

03:22in mind that some of it either

03:23through a form 1099 NEC or a

03:26form 1099 K will be reported to

03:28the IRS.

03:30Right. So bottom line,

03:31everything's reported to the

03:32IRS reported on your tax return.

03:35And if you need help, there's

03:36definitely products out there to

03:37help you. Correct?

03:39Correctly. If you have any

03:40question about this form,

03:41remember TurboTax.com either

03:43you'll have resources, or you

03:45can actually talk to a, to a tax

03:47expert, just like we're talking

03:48right now to answer your

03:49questions and make sure that you

03:51finish your return. You do it

03:52with confidence and either

03:54reducing as most as possible

03:55your balance due in terms of

03:57taxes or getting your best

03:59possible tax refund.

04:02Amazing. Miguel Burgos, CPA and

04:04TurboTax expert. Thank you for

04:06sharing all of that.

04:07Oh, my pleasure. Have a good

04:08one.

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