IRS Delays Major Tax Reform for Money-Sharing Apps

IRS Delays Major Tax Reform for Money-Sharing Apps

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A plan by the IRS to tax commercial transactions made through third-party money-sharing apps like Venmo and PayPal is under review.

The IRS decided to delay the transition because, until recently, many users of services like Venmo, PayPal,zelle and Cash App were unaware that they would be receiving tax forms related to their transactions.

The EPA has delayed the change until next year, although it was supposed to start this month.

The IRS is delaying the requirement that payment platforms provide 1099-Ks to both the IRS and individual app users who have reported payments to address concerns about unexpected tax obligations.

“They removed the transaction limit and lowered that threshold to a total of $600. According to Jay McGowan, senior advisor at the Welch Group, there are many suppliers who haven’t necessarily reached the $20,000 and $200 transaction levels. So you can assume that many more people will be affected.

The form will now only be sent if you make more than 200 trades with a yearly value of more than $20,000, but that will change next year.

An overview of all online payment transactions can be found on a 1099-K form.

To increase voluntary tax compliance, these transactions are reported through the form.

Therefore, whenever you do ad hoc work, that is, work that is not related to a regular 9-to-5 work schedule, like a W-2 employee, you will receive a 1099. Accordingly, they’ll issue you a 1099, just like your Uber, Lyft, and Amazon Gig workers, small businesses, or maybe you worked on a contract basis for a Fortune 500 company, according to Olu Muyiwa Aladebumoye, Taxx’s chief operating officer wiz . Tax experts stressed that any money made through a trade or business in exchange for products and services should still be reported to the IRS, but the organization stresses that the new regulation is not intended to track personal transactions.

“The most important thing is that they use company accounts. For example, since small businesses use the Cash App occasionally, they’re directly impacted because they now really need to separate the two, according to Tevin Harrell, chief executive officer of Taxx Wiz. “So you usually have to go to the trouble of creating the business account, and the goal is when you create that business account, you’re only doing business with that account,” Harrell said. Personal transactions such as giving gifts for birthdays or holidays, sharing the cost of a meal or a ride, or sending money to family are not taxed.

Over a 10-year period, the change is expected to increase tax revenues by nearly $8 billion.

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