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Venmo, PayPal and Cash App To Report Transactions Exceeding $600 to IRS

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Assorted apps for peer-to-peer payment are seen on an iPhone | Venmo, Paypal and Cash App To Report Transactions Exceeding $600 to IRS | featured

Businesses that receive payment through apps like Venmo, PayPal, and Cash App will now have to report transactions over $600. This is the essence of a new tax law that took effect this January. 

Democrats introduced this measure as part of the American Rescue Plan in March 2021. Republicans did not vote for this change. 

RELATED: Secret IRS Files Show Wealthiest Americans Pay Less Taxes

IRS To Require Users To Report Transactions

IRS building sign. Internal Revenue Service | Report Transactions

Starting this January, third-party payment processors will need to report users’ business transactions to the IRS. This applies to transactions that exceed $600 for the year.

Previously, payment apps only needed to send users Form 1099-K if gross income exceeded $20,000. Or, if users performed individual transactions in excess of 200 within a calendar year.  

However, the new rule requiring users to report transactions only applies to payment for goods and services.

Using Venmo, Cash App, or PayPal to send gifts to people, pay for the share in rent, or buy dinner. In addition, users that sold a personal item at a loss also do not have to file a report. 

IRS Will Now Know How Much Businesses Earned From Payment Apps

The IRS already requires businesses to report their income. However, the new rule helps the IRS to determine how much small firms earned via the payment systems.

This is regardless of whether individuals will report the transaction on their 1099-Ks. 

PayPal issued a recommendation for users to note the changes. “For the 2022 tax year, you should consider the amounts shown on your Form 1099-K when calculating gross receipts for your income tax return.

The IRS will be able to cross-reference both our report and yours,” PayPal wrote on its Q&A page. 

New Rule Doesn’t Apply For Transactions Made in 2021

Even as the changes are now in effect, the changes will not apply for 2021 transactions. This means that small businesses don’t have to consider this for now. They will need to do so once the 2022 tax-filing season begins next year. 

As a result of the changes, apps like PayPal, Venmo, and Cash App might ask for additional information from users.

This includes a user’s Employer Identification Number (EIN), Individual Tax Identification Number (ITIN), or Social Security Number (SSN). 

Separate From Another Democrat Proposal

This new tax rule is distinct from another Democrat proposal for additional transaction reports. The other plan involved requiring banks to report accounts with more than $600 in transactions. 

Originally part of Biden’s Build Back Better program, the proposal met brickbats from opponents. After much pushback, the plan increased the threshold to $10,000.  

Meanwhile, Republicans noted throughout the deliberations that the new rules are unnecessary. 

The proposal to report transactions is just another way for the Biden administration to look into everyday Americans’ daily purchases. 

Watch the FOX 13 Tampa Bay video reporting that the government to tax cash app transactions over $600:

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5 Comments

5 Comments

  • Sean says:

    I’m against the reporting of individual transactions on any apps. If I am paying a debt to whatever receiver, I don’t want to pay extra fees to have it reported, nor should the receiver have anything taken from the payment they get from me to have a transaction reported because I will eventually pay those fees due to the recipient not getting what I sent.

  • Kim says:

    No I do not support this kind of invasion by the government you report your income not outgoing payments ..I really have to get the hell out of this country its turning Marxist/communist! and it appears no one can stop this madness? plus I learned they require photo ID of taxpaying citizens so to identify your race “if your a white American look out”! but, if you are black its a very different story!
    and no photo ID or citizenship required to vote?
    I want out of this country ASAP!

  • Branden Oconnell says:

    Don’t like it get out please you only make this country worse with your presence and obviously your idiocy bye bish

  • Darron Clark says:

    Taxation is theft. The IRS and Federal Reserve should be abolished. They are evil incarnate.

  • Robin says:

    Personally, I don’t believe this is constitutional, and I look forward to the democrats who put this rule in place having to eat it when the courts say the same thing. They have no business sticking their busybody noses into my personal finances. Innocent until proven guilty means there’s no good cause to suspect and Snoop. I’m already so sick if these socialists destroying what used to be the greatest nation in the world! If only one could fix stupid, but…

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