Posted on 11/26/2022 9:09:49 PM PST by SeekAndFind
The Internal Revenue Service is reminding tax filers to prepare to report transactions of at least $600 that are made through so-called “third-party” facilitators such as Venmo and PayPal.
The agency on Tuesday posted an explainer warning American business owners earning $600 or more per year on payments that are received through apps such as Zelle, Cash App, Venmo, and PayPal to file a tax form known as Form 1099-K.
The IRS is interested in transactions involving part-time work, side gigs, and selling goods, according to the agency.
The rule does not apply to noncommercial payments like reimbursing someone for food or rent or other one-off transactions such as selling an old piece of furniture, according to accountants.
Before this year, the threshold for filing a Form 1099-K report was at least 200 transactions totaling an aggregate of at least $20,000.
When Congress passed the American Rescue Plan Act of 2021, it included a provision that reduced the reporting threshold to a single transaction over $600.
The Biden administration hopes that by reducing the threshold, the measure will crack down on Americans evading taxes by not reporting the full extent of their gross income.
The proposal was offered as a way to help pay for a $3.5 trillion social spending bill that would invest in climate programs, child care and education.
Tommy Lucas, an Orlando, Fla.-based certified financial planner, told CNBC that filers must include any sum that is reported on Form 1099-K as part of their business income.
Failure to do so could trigger an audit since the IRS obtains a copy of Form 1099-K directly from the third-party payment facilitator.
(Excerpt) Read more at nypost.com ...
It isn’t (supposedly) just single transactions - but the total amount for the year.
You sold your old gym sock collection for $1/pair... and over the course of the year - all 30 pair were sold - that’s $30 (plus anything you included in the sale for shipping)... so say $60 with shipping. You also sold that old generator for $400 (that you bought for 1200 a few years ago). And you sold the old, nearly bald tires off your truck when you bought new ones - and sold them for $200. Ooops.... you now are $660 - 10% over the reporting threshold. Venmo (or Paypal, or whatever payment processor you used) auto-generates a report to the IRS for that $660 in “income” you received for the taxable year.
Now- you MIGHT skirt this if you use multiple services to handle payment - say the generator via a completely different entity than the tires or the sock collection... for now....
Yes. PayPal is supposed to send you a 1099 and report the transaction
the legislation says total/cumulative...
Zactly!!
You are correct: it is $600 / year.
If you get a 1099, you know the IRS did too.
So there is that.
Exactly- how do I deduct what I originally paid for it and the loss I incurred by selling it for less than 10% of what I paid for it?
Only criminals can be criminals
“crack down on Americans evading taxes”
Yet, if you come across the border illegally, you are rewarded with a check, cellphone, place to stay, bus ride anywhere in the country you wish, and enrolled into Social Security and Medicaid, which you didn’t help fund.
What a great country!
I hate to barter... and flea markets and yard sales are gonna boom. There was a market before pay sites, maybe this is an attack on pay sites.
Cash is King.
Okay so remember every thing costs 599.99 now.
It’s not just $600 per transaction - it’s anything over $600 accumulative over the year.
“...warning American business owners earning $600 or more per year on payments that are received through apps such as Zelle, Cash App, Venmo, and PayPal to file a tax form known as Form 1099-K.”
Ebay made me give them my SS number because I sold over $600 but not as a single transaction. It was used odds and ends(one-off transactions) that totaled up to over $600. My paypal account is a business account and has been for years. Might be the difference.
On a related note, eBay is now sending 1099-K’s to sellers who receive over $600.
They overhauled their money system so that payouts to sellers now come directly from eBay rather than through PayPal. Buyers can still pay through PayPal but sellers get payed directly from eBay. I guess eBay thought this was necessary to comply with the new 1099 regs.
Not my job …..
The good news is that you can claim QBID for your QBI. And you might be able to claim Self-Employed Earned Income Credit. AND, if you maxed out the traditional FICA contribution, you can get a credit for the employee portion of the FICA paid because of the income on Schedule SE, which income number comes from Schedule C.
Soooooo.....
I buy a camera for $2000 in, say, 2016. Sell it in 2022 for $700. If I’m to declare the $700 as income, should I also declare the $1300 loss?
I am not a business - I just like to play around with newer photography gear.
Virtually everything that involves the IRS is nuisance paperwork.
To be fair, these aren't new taxes.
These new 87,000 IRS agents have been tasked with going after "gig economy side hustles" that are growing across the country as the nation battles inflation.
"Side hustles" like my wife's cake pop business that she does out of her kitchen and advertises on Facebook. Or the multitude of Etsy and eBay businesses that people have been running and largely avoided paying taxes on because they don't consider these "real jobs".
Biden is reminding these people, "You owe us $$$ and we're coming after you!"
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