Good News for SL Merchants - IRS Delays Reporting Threshold

[Prokofy Neva]

Ebay reports that the IRS will delay their enforcement of a 1099-K reporting threshold for third-party payment platforms. Tilia would be among them, as would PayPal.

https://www.irs.gov/newsroom/irs-announces-2023-form-1099-k-reporting-threshold-delay-for-third-party-platform-payments-plans-for-a-5000-threshold-in-2024-to-phase-in-implementation?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_8497682

Of course, as with health care and your doctor, you have to talk to your own individual accountant or figure it out yourself for your situation and it may not fit.

But it looks to me that for those who making less than US $20,000 a year, they will not have to fuss with this.

Quote

 

Following feedback from taxpayers, tax professionals, and payment processors and to reduce taxpayer confusion, the Internal Revenue Service delayed the new $600 Form 1099-K reporting threshold requirement for third party payment organizations for tax year 2023 and is planning a threshold of $5,000 for 2024 to phase in the new law.

Third party payment organizations include many popular payment apps and online marketplaces.

The agency is making 2023 another transition year to implement the new requirements under the American Rescue Plan that changed the Form 1099-K reporting threshold for payments taxpayers get selling goods or providing a service over $600. The previous reporting thresholds will remain in place for 2023.

 

To me it matters, because after weathering the harsh sudden development of having to pay New York State tax of 0.825%, which for me is like adding two whole sims' tier without any sims to show for it, I didn't want to then turn around and pay AGAIN for cashing out Lindens to dollars when I already paid Linden Lab a fee, paid Tilia a fee, and paid PayPal a fee to send it to my bank. To be sure, PayPal does not clip Tilia payments as they do with every other customer payment, possibly because Tilia worked out some deal with them, who knows.

To be sure, you can present your monthly tier bills as costs to offset the task, but it's all a chore, when we still have to explain to banks that no, Second Life is not an arcade (it appears as a video games arcade in some banking codes) and no, this is not gambling, which is illegal, but the cost of server rental.

I have also wondered how these transactions would actually be coordinated, and wondered if I'd get 3 1099Ks for the same amount, one from Tilia for cashing out of SL; one from PayPal for receiving; and one from say, Venmo, for using them to pay a worker. Surely they'd sort this out? But maybe the delay is due to them NOT having sorted this out.

You also now have more time to contemplate whether you really want to be bothering with any of this.

 

[Flea Yatsenko]

Ah, a president polling extremely poorly in an election year. Time to enjoy some cheap gas and a lot of unpopular things being delayed.

[Tapple Gao]

In 2020, my 1099-K was for the amount sold on lindex. for 2021 and 2022, it changed to the more reasonable 'amount credited out to paypal', which means sim expenses are already deducted before it hit the 1099-K. For 2021 and 2022, the only business expense I claimed was the 5% tilia -> paypal fee

I've never received a tax form from paypal. I don't use venmo

Edited February 1 by Tapple Gao

[Tapple Gao]

I just got my 2023 1099-K form. Seems they improved the reporting again. Now it reports the money received into my paypal account, not the money sent. So now the 5% process credit fee is baked into the 1099-K and I no longer have to report it as a business expense. woo!