The change is not meant to apply to people who are receiving payments as gifts or as reimbursements from friends after splitting the cost of a restaurant meal, said Erin Collins, the national taxpayer advocate, who heads an agency within the I.R.S. that assists taxpayers. But some people could mistakenly receive forms anyway — say, if they get payments mislabeled as business transactions rather than “friends and family” payments, she said.
“The change is going to cause confusion,” Ms. Collins said.
Mr. Walters of Blucora said he might be among taxpayers receiving a 1099-K. He likes to attend concerts, he said, but sometimes his plans change. “If I can’t make it to the concert,” he said, he sells the tickets on StubHub, which is among the online marketplaces that have alerted users to the new rules.
Here are some questions and answers about the new 1099-K rules:
What can I do to prepare for next year’s tax season?
If you use payment apps, Ms. Collins said, remind those sending you personal payments to designate transactions as such, and make a note of what the payment was for. Venmo and its parent, PayPal, allow users to designate transactions as personal or for purchases. Payments are tagged “friends and family” by default when money is sent between two consumer accounts, the company says, but users can choose the “goods and services” button when making a purchase. Only payments sent with the toggle on are tagged as goods and services for the recipient.
Cash App says on its website that users with standard, personal accounts won’t receive the forms and that only users with business accounts will have transactions reported to the I.R.S.
If you do get a 1099-K in January, don’t ignore it, said Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals. If you think it’s in error, you can request a correction, though that takes time and may delay you in filing a return.
If the amount isn’t taxable, you generally don’t have to report it on your return, accountants say. But make sure you have records to prove that, Mr. O’Saben said, because you may get a letter from the I.R.S. asking for documentation.