IRS to Require Reporting of Trasactions Greater than $600 from PayPal, Venmo etc.!
Cent1225
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By: Veronica Morley, 23ABC
Posted at 9:04 AM, Jan 03, 2022 and last updated 2022-01-03 14:24:29-05
WASHINGTON, D.C. (KERO) — The IRS has designed new ways of taxing cash app transactions, but misconceptions might be leaving some confused about who these changes apply to.
Starting this year, businesses and individuals accepting payments through cash apps like Venmo, PayPal, Cash App, and Zelle will now have to keep an eye out for 1099-K forms. That's because the IRS will be keeping a watchful eye on cash app transactions for small businesses.
As part of the American Rescue Plan Act, cash apps will now report commercial income over $600. Previously, those business transactions were only reported if they were more than $20,000 at the end of the year.
Cash app users need to know this new rule only applies to business transactions. Those using apps to send money for personal reasons, to purchase items, or pay bills will not be affected. However, individuals selling products on apps or websites like Etsy or eBay might now have to report these transactions on their taxes.
For small businesses that do rely on cash apps, financial advisors are recommending differing between which apps are used for business transactions and which are used for personal use.
Cash app users might also expect now to clarify the nature of transactions made and received. And no matter how small the business or service might be, it’s a good idea to report all income to the IRS. If the total remains fairly low, reports say it’s unlikely you’ll owe taxes on it.
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Comments
Does this mean that checks are going to become more attractive for purchases?
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There will be a lot more cash transactions at coin shops and coin shows.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I was thinking more along the lines for online purchases.
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Wasn’t there a thread that was closed recently on this very subject?
Yes. Does anyone know why it was closed?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Probably from all the anti-US government propaganda goin around.
You all should stand up for the United States of America as this is the greatest country on earth.
No big deal; work in all your deductions. One year I did not download my paypal tax document, including that and got a $70K bill from the IRS but through a good CPA ended up paying nothing.
I've never understood why the IRS did not get a record of all larger paypal, venmo, etc. transactions.
Thread title is inaccurate. It's not "transactions greater than $600", it's "gross annual transfers totaling over $600".
Does this mean $600 total sales on PayPal for the year or just anytime I receive a payment of $600 or more? If I have several $100 sales that add to say $1200 for the year, will I get the tax form, or only if one such sale is $600+?
There is a big difference between standing up for the U.S. and the constitution and standing up for the government itself.
It refers to the total sales for the year. As an example if you do 6 transactions at $100 each you have met the requirement to receive a 1099-K.
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Thanks for clearing that up for me. That is what I thought it meant.
They haven’t designed new ways of taxing these transactions, they’ve designed new ways to make it harder to avoid paying the taxes people have always owed.
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I know a lot of vest pockets and other dealers who insist on dealing in cash; personally I like records and find cash messy and inconvenient. $600 is still the reporting start for employees and other transactions, with inflation it should probably be more. "The finer the net (in the sea), the slower the trawler has to move".
A large number of cash deposits will pique the attention of the IRS. My bank reports any amount greater than $3k per day outside of automatic paycheck deposits and $10k within 30 days.
I understand why they didn't want it at 20k like before, but that is quite the jump down to $600. Keep as good of records as you can so you can deduct everything - would be my not-a-CPA advice.
As opposed to all those Venmo transactions....
Can't the IRS already track money that is being moved into and out of a bank account using Venmo?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Does it mean that US Mint needs to report to IRS, since a lot of people using PayPal to buy their products?
Only with a subpoena
The chicks are already very attractive, but you aren't supposed to purchase them.
I can't comment on this.
I would hope this only applies to purchases. I use venmo to give my kids money (and I am sure it will hit a $600 limit) Of course, I can give each $15,000 with having to worry about taxes by sending them a check.
Interesting to read another thread about avoiding taxes. I report all of my digital assets and earnings to the IRS. There is a specific section on the tax form that asks about cryptocurrency now.
So why do people think web 3.0 stakeholders are laundering money?
They’re sure trying/succeeding to change that.
I will no longer sell coins on eBay / I make 5 to 10k / year selling coins I find at shows, etc and did really well last year selling almost 12k - not a lot of money but it’s just a hobby for me and not my job I use for income. But still - if they are going to start taxing it like this then eBay is no longer like the “internet garage sale” it started out to be which was basically a tax free marketplace - so to think I could get a 1099 for 13k to add to my taxable income - you can forget about that I am OUT of the coin business —
If you make 5 to 10k per year selling coins, you should be paying taxes with or without a 1099 and always should have been - even on the 1st day that eBay was online.
eBay wasn't started in order to be a tax free marketplace.
No. But the internet was existing for 20 years as a "sales tax free" marketplace. I think that's what he's thinking about. He just took it to the extreme. LOL
Perhaps. There seems to be more than a little bit of confusion between sales tax and income tax on these message boards.
LOL. No, everyone is quite clear that they don't want to pay either.
Entitled much? You think you shouldn't pay taxes on your side business? Wrong! 😠
Well, to be fair, neither do I. But as that great philosopher once wrote, "You can't always get what you want."
And expanded to include your local landscapers, small cash biz, corner store, small job home remodelers, make sure to report ALL your earnings too!
Not surprisingly seeing lots of construction boots walking around local shows buying bullion with CASH.
But in reality the $600 dollar rule is rediculous. It just creates a big mess of paperwork and hopefully all know you pay taxes on your profit and not your proceeds. Make sure to include all your expenses.
"But in reality the $600 dollar rule is ridiculous. It just creates a big mess of paperwork."
That's why there is a movement in Congress to modify the law. Not sure if it will pass, but if there's enough pressure from mainstream business, it will.
Well 1099k is fine, if you keep good records and are registered as a LLC and/or small business, you can subtract the amount you purchased the coin from what you received for it. Pay tax on the profit only..
Spoken like a true anarchist. ROFL!
Individuals can also deduct the cost of the coin when calculating their capital gain - no need to be a business.
The guy who started eBay did it so that his wife and her friends had a place to auction off their extra PEZ dispensers.
There are two laws out there that have bandied about the number $600. Are you sure about this?
That's not true. It's a made-up story, intended to attract favorable press.
edited to add...
From "Our History" on the eBay website:
"A story is circulated that Pierre created eBay to help his wife collect Pez candy dispensers. Later, it’s revealed that the story was a fabricated one."
Oh no! You can no longer flagrantly run afoul of the tax laws. And now you won’t make that money. So, so sad! Nothing makes me more proud to be a tax-paying citizen than knowing I’m competing with tax cheats.
Keep drinking the Kool Aid....how is the view from your soapbox with your nose so far up in the air?🤔
The tax code remains the same. This isn't new. A nuance, perhaps. Reporting income isn't just w-2 earnings. Wages, tips. etc, profits on digital assets ....okay ... some new.
I was at the ANA this past August. On two different transactions I bought $1200
of ASEs. No receipt offered each time. 3 years from when I go to sell I will most
likely get a 1099K. Where is my proof? I paid cash each time and got a $1.50
per discount.
And what kool aid am I drinking, exactly? Here’s a law. I follow it. Scandalous! 😮
Besides, I have a plane. I can get way higher than the best soap box you can find. The view is amazing.
i don't make the rules. A statement of fact is not an endorsement of the current order.
Or do you deny that he owes tax under the current social order?
The IRS will likely take your word for it.