The new rules make it harder for someone to evade existing taxes owed if they're getting paid through an app for business transactions.
If you use payment apps like Venmo, PayPal or CashApp, the new year ushered in a change to an IRS tax reporting rule that could apply to some of your transactions.
A business transaction is defined as payment for a good or service, including tips. So it does not include personal transactions, such as being reimbursed by a friend for dinner or receiving money to pay for a group gift. "[Payment app providers] are relying on consumer prompts and interfaces to help consumers classify the reportable versus non-reportable transactions on the front end, and then [providing] educational pieces, like FAQs, to help the consumer understand the details of the new reporting requirements if they receive a 1099," said Scott Talbott, senior vice president of government relations at the Electronic Transactions Association.
PayPal, which owns Venmo, is offering similar guidance for users of its app, a company spokesperson said. As for anyone used to making a little money on the side by occasionally renting out their place on Airbnb, or selling some handmade goods on Etsy, the new $600 reporting threshold will affect you, too. Those online platforms are likely to issue you and the IRS a 1099-K as well.
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