People who use payment applications like Venmo, PayPal, and Cash App may need to record some transactions totaling more than $600 to the Internal Revenue Service (IRS).
Not all payments app transactions exceeding $600 require IRS reporting. Income must be reported, but if you receive a 1099-K form, you might need to show that a transaction was not profitable.
Who Needs To Report $600 Income?
The agency only requires users of third-party applications like Cash App, Venmo, or PayPal to report transactions exceeding $600 if they are deemed to be income that would typically be reported anyway.
The IRS 1099-K form, which is used to report any taxable income paid through third-party applications, is sent to users by each individual payment app if they recorded more than $600 in income using the app.
It was promised $80 billion in funding as part of the Inflation Reduction Act (IRA), which was enacted into law (IRS). This ten-year infusion of cash sparked nationwide rumors about what the IRS would do with the money and how much it would harm taxpayers who feared more audits and enforcement.
Read more: Waiting for your tax refund? IRS will soon pay your interest
IRS Funding
The government agency will get the promised funds over the course of ten years. The majority of the funds were intended for enforcement, with a focus on boosting compliance among high-net-worth individuals, large partnerships, and corporations.
The remaining funds were intended by Congress to be used for operations, taxpayer services, and the creation of a free e-filing system, among other things. It is yet unclear exactly how the IRS will distribute the money.
On November 11, Commissioner Charles Rettig’s term came to an end, and the Biden administration has chosen Daniel Werfel as his successor. After serving for 16 years with the Office of Management and Budget, Mr. Werfel became acting commissioner in 2013 while Commissioner Rettig, a longtime tax litigator, came from the tax community.
Although $80 billion is a significant sum of money, it’s important to remember how underfunded the agency has historically been.
Read more: IRS sets new rule: Anyone with $600 income must report, file for taxes
