The Saving Advice Forums - A classic personal finance community.

Announcement

Collapse
No announcement yet.

Paypal, Venmo, Zelle - payments over $600 in 2022 to be reported

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Paypal, Venmo, Zelle - payments over $600 in 2022 to be reported

    The government wants their share. Looks like lots of record keeping in the future. You will only be taxed on what is actually taxable but this is going to create work for some people.
    Effective January 1, 2022, anyone receiving $600 per year for goods and services using Venmo, Zelle, Cash App, or PayPal will be required to file a 1099-K.

  • #2
    Good. The government has the people's best interest in mind. I completely support all decisions our government makes.

    Comment


    • #3
      Originally posted by rennigade View Post
      The government has the people's best interest in mind. I completely support all decisions our government makes.
      I hope you’re being sarcastic with this comment. Support all decisions they make? They get it wrong a lot of the time. (And that’s not a political comment for one way or another.)

      This rule seems like a lot of administrative work for not a lot of value. The previous threshold of $20k would capture most businesses. Reducing to a $600 threshold seems asinine.

      Comment


      • #4
        The problem is that the law has always required you to report income but lots of people don't. I've seen so many discussions over the years about whether or not to report ebay sales. The answer is always yes. You need to report them. That doesn't mean you'll owe taxes but all income is reportable.

        My daughter recently made a large transaction via Paypal. She sold her ticket to a fan convention. I don't remember exactly how much she got but it was over $600 so she got a notice from Paypal requiring her to enter her tax ID. It won't be a taxable transaction because she sold it for a few hundred less than she paid, but she may end up getting a 1099 if they do that for 2021.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

        Comment


        • #5
          Oh, naysayers, you can still cheat on taxes by using cash and small transaction sizes. You just have to deal with the inconvenience of cash and the potential liability of tax fraud or theft of the cash itself.

          Where's all the "just close the loopholes!!" -people? A loophole has been closed.

          Comment


          • #6
            Originally posted by ua_guy View Post
            Oh, naysayers, you can still cheat on taxes by using cash and small transaction sizes. You just have to deal with the inconvenience of cash and the potential liability of tax fraud or theft of the cash itself.

            Where's all the "just close the loopholes!!" -people? A loophole has been closed.
            Well, you can't cheat by making small transactions, because it the total is $600 or more, you'll still get the 1099. Cash works, as it always has for criminal activity, but it's worthless for online business. Crypto certainly holds a lot of appeal for criminals, until governments start tracking it better and requiring it to be reported and taxed just like everything else.

            Closing loopholes is fine with me. I've always been annoyed that I spent so much time and effort tracking my sales and filing my taxes when I knew many others doing the same sort of business as me didn't do any of that.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

            Comment


            • #7
              From the article: "a provision in the American Rescue Plan Act, which goes into effect on January 1, 2022, according to which anyone receiving $600 per year using Venmo, PayPal, Zelle, or Cash App will receive a 1099-K and be required to report that income on their taxes."

              That's just it. You've always been required to report that income on your taxes. They're just formalizing the system to catch all of the people who didn't. I'm perfectly okay with that.

              It will create inconveniences for sure. I do all of my mom's shopping since COVID began. I periodically transfer money from her account to mine using Zelle to repay me for those expenditures. I will now get a 1099 for that "income" even though it isn't really income and there is no taxable transaction occurring. Just one more thing for our CPA to deal with at tax time.
              Steve

              * Despite the high cost of living, it remains very popular.
              * Why should I pay for my daughter's education when she already knows everything?
              * There are no shortcuts to anywhere worth going.

              Comment


              • #8
                So how do we go about justifying all of those new 1099s to not get taxed on it? Because they aren't going to outline every transaction or recipient. It'll be "you received $1300 in Venmo transactions this year". Then the IRS considers all of the repayments for shared costs as income? That's almost exclusively what I get Venmo or similar payments for... And the onus will be on me to somehow prove that the back & forth transfers between my friends & I are repayments for restaurant tabs and not a service/sales arrangement? What possible evidence can there be to prove that?
                "Praestantia per minutus" ... "Acta non verba"

                Comment


                • #9
                  Originally posted by kork13 View Post
                  What possible evidence can there be to prove that?
                  That’s the golden question. How do you close the loophole but avoid the unintended consequences?

                  I file a business return, but will everyone have to start doing that to justify why their Venmo payments aren’t taxable? There will need to be some way to properly report it at tax time. Maybe there already is. I’m not an accountant so I don’t know.
                  Steve

                  * Despite the high cost of living, it remains very popular.
                  * Why should I pay for my daughter's education when she already knows everything?
                  * There are no shortcuts to anywhere worth going.

                  Comment


                  • #10
                    Originally posted by kork13 View Post
                    So how do we go about justifying all of those new 1099s to not get taxed on it? Because they aren't going to outline every transaction or recipient. It'll be "you received $1300 in Venmo transactions this year". Then the IRS considers all of the repayments for shared costs as income? That's almost exclusively what I get Venmo or similar payments for... And the onus will be on me to somehow prove that the back & forth transfers between my friends & I are repayments for restaurant tabs and not a service/sales arrangement? What possible evidence can there be to prove that?
                    I'd imagine it will be kind of like spending from an HSA. Every year I get a tax form stating my distributions from the account. The IRS assumes I am a good person and have spent that money on approved healthcare expenses. It's on me to save receipts and details about the transactions in case I'm asked. That said, I haven't read the details surrounding this new law. I might do one or two app transactions per year and they are usually less than $600. Usually car parts sold by other enthusiasts.

                    But they don't really know unless they do an audit--at least not for HSA transactions.

                    This really sounds like it's more geared towards people doing business under the table versus private transactions to reimburse for a dinner tab or concert tickets, etc. Imagine a plumber who takes 50% of his payments to his business by Venmo/Zelle and decides not to report it as income.

                    Comment


                    • #11
                      people will end up doing smaller transactions maybe?
                      LivingAlmostLarge Blog

                      Comment


                      • #12
                        Originally posted by LivingAlmostLarge View Post
                        people will end up doing smaller transactions maybe?
                        I believe it is a running toll. So, if you do 24 increments of $25.00 on zelle totally $600. You get a 1099-k and it is considered income until you prove otherwise. If you don't keep good records, you could end up paying tax on it even if it was a gift or someone paying you back for dinner....

                        Comment


                        • #13
                          Originally posted by LivingAlmostLarge View Post
                          people will end up doing smaller transactions maybe?
                          Yes it is $600 total per year, not per transaction. Tons of people exceed that. I certainly do.
                          Steve

                          * Despite the high cost of living, it remains very popular.
                          * Why should I pay for my daughter's education when she already knows everything?
                          * There are no shortcuts to anywhere worth going.

                          Comment


                          • #14
                            Originally posted by disneysteve View Post
                            Yes it is $600 total per year, not per transaction. Tons of people exceed that. I certainly do.
                            I had thought it was per transaction, not per year. Whats to limit the IRS from taking the same stance on our bank accounts?

                            Comment


                            • #15
                              Originally posted by myrdale View Post

                              I had thought it was per transaction, not per year. Whats to limit the IRS from taking the same stance on our bank accounts?
                              Funny you say that, a provision in one of the recent (or still in debate) bills allows/requires them to do just that.
                              "Praestantia per minutus" ... "Acta non verba"

                              Comment

                              Working...
                              X