Cash apps like Venmo and PayPal now required to report $600+ transactions to the IRS
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The tax code in the US simply obtained a reasonably main change surrounding cell paying apps like Money App and Venmo. Beginning on January 1, these apps at the moment are required to report any industrial transactions that whole greater than $600 in a yr to the Internal Revenue Service (IRS).
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We initially heard about this replace within the tax code a couple of months in the past. The change got here as a part of the American Rescue Plan Act of 2021. Initially, Venmo, PayPal, and related apps have been solely required to report accounts with greater than 200 transactions and $20,000 in a yr. Now, the quantity has been significantly decreased to only $600, with no minimal variety of transactions.
After we first heard about this new legislation again in October, lots of people we nervous about what precisely this new legislation meant. Does it imply that we’ll begin being taxed on cash that we ship to our family and friends through Venmo for private issues like splitting a dinner invoice or an Uber experience?
Happily, that’s not the way it works. Apps like Money App or Venmo are required to report solely industrial transactions that exceed the $600 threshold. So your entire private transactions are nonetheless free from taxation. You would possibly nonetheless get a 1099-Ok kind from the app, however that received’t imply that you simply’re required to pay tax on that cash.
One additional side to notice on this change is that it additionally applies to issues like eBay, the place a fee settlement firm is chargeable for processing cash transactions. The earlier reporting threshold of 200 transactions and $20,000 has been significantly decreased to only $600, so individuals with on-line shops can also be topic to some additional taxes going ahead.
Once more, this variation solely applies to industrial transactions. The IRS is the worst federal authorities entity that now we have on this nation, however at the least the company hasn’t began coming after our private transactions but.