For all people using Venmo as part of a business or wage transaction, the IRS has news for you.
In 2022, users will need to fill the 1099-K Form for every direct transaction for more than $600.
PayPal users, Venmo, and Airbnb owners will disclose their revenue to the IRS.
Before the new ruling, entrepreneurs didn’t disclose economic information to the Internal Revenue Service unless they received $20,000 in total payments.
“Anyone who receives at least $600 in payments for goods and services through Venmo, or any other payment app, can expect to receive a Form 1099-K,” Venmo posted.
The new rule began on January 1. It aims to eradicate people avoiding taxes.
Users getting paid through cash apps for business transactions will require to fill out the form.
What’s Form 1099-K?
The Payment Card and Third Party Network Transactions (Form 1099-K) is a tax form that reports “goods and services” transactions.
The IRS requires companies like Paypal, Venmo, Upwork, Etsy, and more to file Form 1099-K.
According to the new legislation, you might separate business transactions and regular transactions from your apps.
Venmo updated its question and answer policy due to law changes.
Paypal also is guiding its users to know the new policy. Meanwhile, Square Cash App updated its policy by opening business accounts for its users.
The “new $600 reporting requirement does not apply to personal Cash App accounts. Instead, it only pertains to Cash for Business accounts, and applies only to payments received in 2022.”
According to reports, payment apps will grant their users a system for entering business payments or regular transactions.
Filing Form 1099-K is obligatory.