NEW $600 Tax Law?
Updated: Feb 16, 2022
Mobile Money Apps like Venmo To Report Payments Exceeding $600 To IRS??
So many people are freaking out over the new tax laws that have been put into place for Cash Apps like Venmo, Cash App, and PayPal. Im here to dive deep into each mobile money app to see just exactly how they are going to make this happen.
Starting January 1st, mobile money apps like Venmo, Cash App, and PayPal must report any transactions over $600 to the IRS. 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.
In past years, mobile money apps only had to report to the IRS if a person had over 200 transactions in a single year that exceeded $20,000. Seems like the Government is cracking down, trying to squeeze every little cent they can from the people.
When I first heard the news, I had sooo many questions about how, and when they were going to make this happen. I am an avid user of many Cash Apps so I dove deep into research to see how each one would affect me and my friends.
Cash App is only applying this new tax law to Business accounts and business transactions.
So if you have a personal, non-business account with Cash App there's no need to worry about the $600 threshold. You're in the clear! Obviously if you're using a personal account for business transactions, then it's your responsibility to report that with your taxable income.
If you do however have a business account with Cash App, and exceed the $600 threshold, you will receive a form 1099k from Cash App, and be expected to pay your fair share of taxes.
They are reporting ANYONE with goods & services transactions over $600
They do specify that if your transactions are not for sales of goods or services then you are in the clear, but....ANYONE and EVERYONE who exceeds $600 business transactions will receive form 1099-K and be expected to report that to the IRS.
Be aware that PayPal(owner of Venmo) said they will be monitoring accounts to make sure you don't sell any goods or services. Not quit sure how they are going to make that happen, but I would be careful.
Didn't even bother to update their website for the new $600 requirement
From what I can see, PayPal will also be sending out a 1099-K for individuals who reach the $600 threshold with business transactions. PayPal also owns Venmo, and since Venmo updated their website, Im assuming PayPal will follow in the same footsteps. When using PayPal you can select if your payment is between friends and family, so assuming your transactions are not for business then you won't have to worry. Like I said before, be aware that PayPal said they will be monitoring accounts to make sure you don't sell any goods or services.
No one is getting reported!! Zelle is your friend!!
Zelle basically said that it's your own responsibility to report your taxable income to the IRS, and they have nothing to do with the new tax law.
Even if the total is greater than $600, it's still your own responsibility to deal with your taxes, not theirs. Zelle even tells you to consult with a tax professional because it's none of their damn business what you do with your money.
Should you be worried?
Overall, major tax laws haven't changed, the law determining which income is taxable or not has not changed, but ways to hide unreported taxable income is getting smaller and smaller. If you're doing your taxes the correct way (legally) you shouldn't worry about the new $600 tax law. If anything it makes it easier for you to file your taxes by doing the work for you. But let's be honest, the Government isn't doing this to help you out, they're doing it to make sure they squeeze you dry.
Any and all business transactions should be included as income when filing your taxes, and you should already be keeping up with those transactions. The only people who have to worry are the ones doing sketchy things.. So if that's you, maybe brush up on your tax code and re think the way you do things.
If you are unfamiliar with tax laws, please brush up before doing your taxes. It's always good to do your own research before putting your complete trust in a tax individual.