Mobile payment apps such as PayPal, Venmo, Zelle, and Cash App have begun reporting transactions that are over $600 per year.
Prior to this change, mobile payment apps were only required to report to the IRS when a person had over 200 commercial transactions that exceeded $20,000 in a year. As of January 1st, mobile payment apps began reporting all commercial transactions over $600 annually.
If a person exceeds $600 annually via mobile app payments, they must file a Form 1099-K” to account for the transactions. Citizens will begin receiving the forms in the weeks to come ahead of filling out their 2022 income taxes, which are due in April 2023.
These new reporting metrics were implemented as part of the American Rescue Plan Act passed in March.
PayPal and Venmo offer transaction categories to differentiate what the funds are being transferred for. If you send money to help a friend, you may select personal/friends and family. If you are sending money to purchase something, you will choose goods and services. This is important to note because all purchases of goods or services must be reported to the IRS.
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