New tax rule requires currency apps to report transactions totaling over $ 600 / year
SHREVEPORT-BOSSIER, Louisiana (KTAL / KMSS) – Third-party money apps like Venmo, Paypal, and Cash App are required to report business transactions over $ 600 per year to the IRS, thanks to a change in the code of taxes that took effect on January 1, 2022.
“Well, I’ve heard of it, but basically at the same time it’s something like a credit card pass. Your machine will also bill you, so it tracks the payment. I have no problem with that, ”said Karl Blake, owner of Homemade Meals in Bossier City.
Payments are only taxed if the money is received as a good or a service. Gifts and donations are exempt.
The new rule, enacted as part of the American Rescue Plan Act, allows the IRS to track how much money businesses actually make from apps, regardless of what they put on Form 1099-K.
Previously, mobile payment apps only had to notify tax authorities when a person made more than 200 business transactions per year with a total value of over $ 20,000, according to the IRS.
“It’s going to force people to be a little more careful about what they put on their taxes as well,” said Alexandra Perry, owner of The Favored Party at Shreveport. “Sometimes as a small business we get a lot of donations and a lot of gifts from family and friends. So we’ll have to be more specific about that as well. “
“I have a feeling that other companies are going to get around this so that they don’t have to pay taxes or find different ways to get money than Paypal or Venmo or those services. “said Perry.
“If you have Cash App or Venmo and that’s how you have to pay, we’ll most likely accept it. Simple, we’ll accept your payment, ”Blake said.
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