{"id":5718,"date":"2025-09-24T09:29:20","date_gmt":"2025-09-24T13:29:20","guid":{"rendered":"https:\/\/keysolutions.us\/blog\/?p=5718"},"modified":"2025-09-24T09:29:22","modified_gmt":"2025-09-24T13:29:22","slug":"big-changes-to-1099-filing-requirements-under-the-obbba","status":"publish","type":"post","link":"https:\/\/keysolutions.us\/blog\/big-changes-to-1099-filing-requirements-under-the-obbba\/","title":{"rendered":"Big Changes to 1099 Filing Requirements Under the OBBBA"},"content":{"rendered":"\n<p>Filing tax forms is never fun\u2014but staying ahead of changes can reduce your reporting burden and help you avoid unnecessary penalties.<\/p>\n\n\n\n<p>If your business pays independent contractors (non-employees) for services, you\u2019re likely familiar with <strong>IRS Form 1099-NEC<\/strong>. For decades, the rule has been simple: if you pay an independent contractor <strong>$600 or more in a calendar year<\/strong>, you must file a Form 1099-NEC. Failure to do so can result in substantial penalties.<\/p>\n\n\n\n<p>That threshold is about to change.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>New 1099-NEC Threshold<\/strong><\/p>\n\n\n\n<p>Thanks to the <strong>One Big Beautiful Bill Act (OBBBA)<\/strong>, beginning with payments made in <strong>2026<\/strong>, you\u2019ll only need to file Form 1099-NEC if you pay an independent contractor <strong>$2,000 or more<\/strong> during the year.<\/p>\n\n\n\n<p>Even better, starting in <strong>2027<\/strong>, the threshold will be indexed for inflation in <strong>$100 increments<\/strong>.<\/p>\n\n\n\n<p>This update means many businesses will have <strong>fewer 1099-NEC filing obligations<\/strong>\u2014a welcome simplification for small business owners and bookkeepers.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Changes to Form 1099-K Thresholds<\/strong><\/p>\n\n\n\n<p>The OBBBA also tackled the much-debated <strong>Form 1099-K<\/strong>, which is filed by <strong>third-party settlement organizations (TPSOs)<\/strong> such as PayPal, Venmo, Uber, Lyft, and eBay. These platforms\u2014not the business or payer\u2014are responsible for issuing 1099-K forms when payments meet specific criteria.<\/p>\n\n\n\n<p>Here\u2019s how the rules shake out:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Old law<\/strong>: The 1099-K threshold was scheduled to drop to $5,000 in 2025 and then $600 in 2026\u2014potentially triggering billions of new filings.<\/li>\n\n\n\n<li><strong>New law under OBBBA<\/strong>: Effective <strong>retroactively to 2022<\/strong>, TPSOs must issue a Form 1099-K <strong>only if both<\/strong>:\n<ul class=\"wp-block-list\">\n<li>The recipient receives <strong>more than $20,000<\/strong>, <strong>and<\/strong><\/li>\n\n\n\n<li>The recipient has <strong>more than 200 transactions<\/strong> during the year.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p>This rollback to the <strong>2022 thresholds<\/strong> is a huge relief for both platforms and taxpayers, who would have otherwise faced a flood of 1099-Ks for relatively small transactions.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>A Final Reminder<\/strong><\/p>\n\n\n\n<p>Even with these new thresholds, it\u2019s critical to remember:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>All taxable income must be reported<\/strong>\u2014whether or not you receive a 1099 form.<\/li>\n\n\n\n<li>Just because a form isn\u2019t issued doesn\u2019t mean the IRS doesn\u2019t expect you to include the income on your tax return.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>IRS Penalties<\/strong><\/p>\n\n\n\n<p>The IRS takes information reporting seriously. The penalty for failing to file a 1099 is currently <strong>$310 per form<\/strong>. And remember:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You must file <strong>two forms<\/strong> for each vendor\u2014one sent to the vendor and one to the IRS.<\/li>\n\n\n\n<li>That means the real penalty could be <strong>$620 per contractor<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p>Avoiding penalties starts with staying compliant, and the OBBBA\u2019s changes should make that task a little easier.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Filing tax forms is never fun\u2014but staying ahead of changes can reduce your reporting burden and help you avoid unnecessary penalties. If your business pays independent contractors (non-employees) for services, you\u2019re likely familiar with IRS Form 1099-NEC. For decades, the rule has been simple: if you pay an independent contractor $600 or more in a [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3],"tags":[34,23,32],"class_list":{"0":"post-5718","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-irs-tax-planning-ideas-tips-news","7":"tag-exton-accountant","8":"tag-irs","9":"tag-keystone-financial-solutions","10":"entry"},"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9W9tf-1ue","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/5718","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/comments?post=5718"}],"version-history":[{"count":1,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/5718\/revisions"}],"predecessor-version":[{"id":5719,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/5718\/revisions\/5719"}],"wp:attachment":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/media?parent=5718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/categories?post=5718"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/tags?post=5718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}