What’s new with the 1099K for 2022 Tax season

For 1099K received in 2022 for tax returns filed in 2023

Businesses will receive a 1099K if paid $600.00 or more for goods and services during the 2022. If your customers processed a payment through a 3rd party provider like PayPal, Venmo, Cash App, Stripe, Square, etc expect a 1099K.

On the bookkeeping side of things, be sure to reconcile the monthly third party “income” or “paid out” reports to the income accounts reported on the Profit and Loss Statement. When reconciling the PayPal statements – reconcile them the same way you reconcile the bank and credit card statements. The “paid out” or “income” reports for the other third party providers usually show net income, remember to add back the fees to balance with gross income on the P&L.

Personal transactions are exempt. This is one more reason to separate personal from business transactions – if the Economic Entity Principle wasn’t enough.

The Economic Entity Principle states that the recorded activities of a business entity should be kept separate from the recorded activities of its owner(s) and any other business entities. Personal, shareholders, partners, and businesses that have a separate EIN should not be combined with each other.