The Internal Revenue Service is sending a warning to Americans to report transactions of at least $600 that are done through third-party methods, such as Cash App, PayPal, and Venmo.
On Tuesday, the agency reinforced that American business owners making $600 a year or more on payments through these apps will be getting a tax form called Form 1099-K.
The IRS would like information related to transactions that are part-time work, side gigs, and selling goods.
Accountants say that noncommercial payments, like giving someone money back for rent or food, or selling a piece of furniture doesn’t apply.
Prior to this year, it wasn’t mandatory to report this money unless there had been 200 transactions, that would come to about $20,000.
In 2021, the American Rescue Plan was passed, and it lessened the threshold to a single transaction of more than $600. The Biden Administration has hoped that would prevent tax evasion.
Failure to report these funds could result in an audit.
However, the guidelines have received opposition from sites like Ebay and Etsy who have gotten together with others and formed the “Coalition for 1099-k Fairness.” They say that their goal is to prevent “casual online sellers and microbusinesses from unfair tax and privacy burdens.”
