American’s who received a payment of $600 or more throughout the year via Venmo, Paypal or Cash App may be in for a shock when filing their 2023 taxes!
A new IRS rule makes it so any transaction of $600 or more done through popular apps such as Paypal, Cash App or Venmo will have to be reported as income when filling out taxes.
Third-party payment processors will now be required to report a user’s business transactions to the IRS if they exceed $600 for the year. It appears that this rule applies to small businesses right now, but could affect everyone in the near future. It used to be that these payment processing websites/apps were forced to send all users a 1099 tax form if they received more than $20,000 in a single year. Now that threshold has been lowered to $600.
Many people will be shocked to receive 1099’s in the mail – but this is the IRS cracking down on those who attempt to avoid taxes by not reporting their full income on their yearly taxes.
The new IRS rule only applies to payments received for goods and services transactions. This means that using Venmo or PayPal to send a friend or family member money, will be excluded. In addition, items that are paid for that were sold for a loss will also be excluded. So if you paid $500 for a TV and sold it to someone for $450, that amount is no taxable.