As a result of the AMERICAN RESCUE PLAN ACT (a COVID related relief bill passed in March of 2021), these popular payment apps must report all transactions from accounts with over $600 commercial transactions in a year to the Internal Revenue Service (“IRS”). However, despite other sources claiming that the IRS is taxing these transactions, the reporting requirement simply provides the IRS with information that can be used to enforce existing rules (i.e., the requirement that taxpayers provide 1099s to individuals or businesses where the taxpayer paid over $600 in the taxable year).
In response to this new requirement, taxpayers should take care to correctly tag transactions, if possible, in their payment app. This is especially important when dealing with personal transactions on these platforms, as failure to do so could cause the transactions to be reported to the IRS as business related transactions.
While the impact of the new reporting will be minimal, it is causing disproportional concern to taxpayers because of inaccurate or misleading articles on the internet.
If you have any questions or concerns about this or any other legal or tax related issue, contact WEGNER LAW PLLC today at (239) 449-9200 or by email at email@example.com.