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We previously reported that as of Jan. 1, mobile payment apps like Venmo, PayPal, Zelle and Cash App will be tracking your payments over $600 and reporting these transactions to the Internal Revenue Service.
The mobile apps will also send online sellers tax forms for payments received of more than $600.
As reported by Black Enterprise, “Online business owners who sell their goods and services through sites like Venmo, Etsy, and Airbnb will be sent tax forms if they have received payments of more than $600,” the outlet writes.
“Until this year, the threshold was much higher ($20,000 and 200 transactions), so it didn’t affect nearly as many people,” Venmo said in a message to its users. “This requirement only pertains to payments received for sales of goods and services and does not apply to friends and family payments.
Here’s more from NBC News:
The change to the tax code was signed into law as part of the American Rescue Plan Act, the Covid-19 response bill passed in March. Previously, these mobile payment apps only had to tell the tax authorities when a person had over 200 commercial transactions per year that exceeded $20,000 in total value, the IRS said.
The IRS now requires a person to “file and furnish a Form 1099-K” if they earn more $600 annually in commercial payments via mobile payment apps.
“Maybe it’s a boon to the IRS, but it’s not coming from the billionaires — it’s coming from the smaller businesses,” Sandra O’Neill, a tax attorney, said in an interview with Bloomberg.
“It’s much harder to go after the billionaires. It’s much harder to go after Amazon. If you have someone who makes a mistake — a small business — it’s very easy to go after them.”
Per CNET, payment apps like PayPal may reach out to individuals and online sellers to confirm tax information, such as your employer identification number (EIN), individual tax identification number (ITIN) or Social Security number.