But the agency will receive aggregate transaction amounts from the payments apps about commercial transactions, Watson says, not information on specific payments. Ambiguous headlines could be partly to blame. That has been miscommunicated to many people, who seem to believe the IRS will be tracking every user's account. Splitting dinner with your friend, sending your roommate money for rent or gifting your cousin a round of birthday drinks? Don't sweat it. "It doesn't change anything about if any transactions are taxed or not." In other words, the IRS is not starting to tax individual transactions between family and friends. "There's been a lot of misunderstanding about the tax reporting changes," says Garrett Watson, senior policy analyst at the Tax Foundation. This also applies to those who run an eBay shop, for example, or any other online store that accepts payment cards, according to the IRS. Previously, it was $20,000 and 200 transactions. ![]() Rather, small business owners, independent contractors and those with a side hustle who use third-party payments apps for commercial payments will have their total transaction value over that threshold reported to the agency by the apps. The IRS is not requiring individuals to report or pay taxes on individual Venmo, Cash App or PayPal transactions over $600. But users were largely mistaken to believe the change applied to them. Learn more here.Searches on Google and Twitter quickly yielded a flurry of panicked and angry responses to a change in tax law put into effect by the American Rescue Plan last year that lowers the reporting threshold for business transactions on mobile payments apps. Please note, transfers are reviewed which may result in delays or funds being frozen or removed from your Venmo account.
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