Chairman of the Senate Finance Committee’s Taxation and IRS Oversight Subcommittee, John Thune, believes simplifying tax requirements would ensure that self-employed workers report accurately, pay all taxes owed and qualify for pandemic relief.
Specifically, Thune proposed a plan in S. 700 that requires either a Form 1099-K or Form 1099-MISC to be distributed to self-employed workers when their earnings exceed $1,000. This new, lowered threshold would replace the current 1099-K threshold of $20,000 in earnings and 200 transactions.
Several large online platforms, including Lyft and Airbnb have encouraged Thune’s efforts to lower this threshold and simplify reporting.
Caroline Bruckner, a tax professor at the American University Kogod School of Business, said recent action taken by states to lower their 1099-K reporting thresholds could influence the federal government to follow suit.
In the last six months, the following states have lowered their 1099-K reporting thresholds:
Illinois – $1,000 threshold paid over 4 transactions.
Virginia – $600 threshold and no transactions.
Maryland – $600 threshold and no transactions.
Florida – a no-income tax state where there was no state 1099 reporting changed the law to require the 1099-K to be reported directly at the federal thresholds.
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