This is not true, you should still report your self-employment income earned from your online seller business as self-employed were always required to do. Myth: If I was paid using a third-party platform and I didn’t receive a Form 1099-K then I don’t have to report it? This is a decrease from the current 200 transactions and $20,000 reporting threshold. So this myth isn’t actually a myth at all! Payment app providers will be required to report and issue Form 1099-K if you’ve made $600 or more on any goods or services you’ve sold in the year starting with your 2022 transactions. Myth: Payment apps will report the income I receive as a self-employed entrepreneur.
If you received money as a gift through a payment app you will not be subject to 1099-K reporting. No, splitting the dinner bill with a friend using a payment app will not result in you having to pay taxes on that money. Myth: If my friend pays me back for dinner on a payment app will I pay taxes on it? What if I got a monetary gift? If you use the payment app to collect payments for goods and services you sell, that income may be subject to taxes. No, you’ll only have to pay taxes on income you’ve made off of goods and services. Myth: If my friend sends me money over Venmo, Cashapp, Zelle or another payment app, will I have to pay taxes on it? Let’s debunk some myths around transactions on payment apps and what will be reported to the IRS. This change could impact people working in the gig economy, online sellers, independent contractors, and other self-employed business owners. The change begins with transactions starting January 2022, so it doesn’t impact 2021 taxes.īeginning with tax year 2022 (the taxes you file in 2023) if someone receives payment for goods and services through a third- party payment network, their income will be reported on Form 1099-K if $600 or more was processed as opposed to the old Form 1099-K reporting requirement of 200 transactions and $20,000. Under the American Rescue Plan, changes were made to Form 1099-K reporting requirements for third-party payment networks like Venmo and Cash App that process credit/debit card payments or electronic payment transfers. There is a lot of rumors and misinformation going around about payment apps such as Venmo, Cashapp or Zelle, specifically when it comes to the IRS and what you will have to pay taxes on.
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