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Cash App, Venmo users receive 1099-K for payments over $ 600

Social media users claim that anyone with annual transactions from cash apps over $ 600 will face new taxes. That is not true.

Some social media users have criticized the Biden administration, the Internal Revenue Service, and the US Treasury, claiming that new taxes will be levied on those who use cash apps to process transactions. This is because after 2022, app users with a total transaction count of over $ 600 will be submitted to the 1099-K form.

this Facebook postHas over 1,200 shares and has been flagged as false information by Facebook.

question

VERIFY viewer Tina asked, “Next year, after $ 600 worth of money has been sent, will 1099 be sent to use money apps like Venmo and Zelle?”

Source of information

answer

Yes, if you receive more than $ 600 in your app, you may receive a 1099-K form. But that doesn’t mean you’re borrowing additional taxes. This only applies to income normally reported to the IRS anyway. Current tax law requires anyone to pay taxes on income above $ 600, regardless of where they come from.

Taxes do not apply to friend or family transactions such as rent payments or dinner refunds.

What we found

NS 2021 American Rescue Planning Act amends The IRS reporting requirements range from $ 20,000 for total payments and 200 transactions to a threshold of $ 600 for total payments without a minimum number of transactions. The new rules will come into effect on January 1, 2022.

President Joe Biden Signed the law The threshold was revised in March.

This report, using third-party applications such as CashApp, Venmo, and PayPal, applies only to goods and services, not personal payments, such as when someone pays for dinner.

David Super, a tax law professor at Georgetown University, told VERIFY in an email: It simply seeks to achieve a more honest report on what income it has and what deductible costs it incurs. “

“If you receive money as a gift or refund from a friend or family member, the effect is likely to be the same and there is no income to count. On the other hand, you use a cash receipt to receive business revenue. If so, you’ll need to report receipts for those businesses that way, “says Super.

Steve Rosenthal, Senior Fellow of the Urban Brookings Tax Policy Center at the Urban Institute, told VERIFY that Congress is expanding gig economy information on payments for services using the cash app. Those using these applications will receive an information report and 1099-K and will report their income.

“For example, Venmo should provide you with an informational report and also tell the IRS that you have received a significant amount of receipts and that you are engaged in a significant number of transactions next year. Congress has lowered the threshold to $ 600. So many people will receive information reports from Venmo and other cash facilities, “Rosenthal said.

“It means that just because you receive an information report that you have taxable income, you may not be able to make a profit, such as a transaction by sale or a transaction that generates income, which is a personal transaction rather than itself. No. “He added. “Like my wife, I often get Venmo grocery payments from some of her girlfriends, and she makes those payments, and it won’t bring any income. And Even if my wife took such a form, she could ignore it. “

He said the IRS audits only a small percentage of taxpayers, and that will continue. But if someone is getting a stable flow of money through the cash app and it looks like it’s for retail or revenue, “it looks more of that unreported business revenue to the IRS. will do so”.

“The main hope is for businesses to voluntarily and accurately report their income once the receipts are more openly documented,” he said.

Other items of VERIFY: Yes, scammers try to impersonate AT & T and many other companies with text messages

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Cash App, Venmo users receive 1099-K for payments over $ 600

Source link Cash App, Venmo users receive 1099-K for payments over $ 600

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