Payments received on Venmo, CashApp and Zelle will be taxable as of January 2022.
If you are a Business Owner you should know that if you receive $600 or more payments in total for goods and services through a third-party payment network, such as Venmo, Cash App, or Zelle, these payments will now be reported to the IRS.
Beginning Jan. 1, 2022, third-party payment networks will be required to send users Form 1099-K for transactions made by mail or electronically. This means you don’t have to worry just yet: The new tax reporting requirement will impact your 2022 tax return filed in 2023.
Which payments are non-taxable? below we give you some examples:
- Money received from a friend as a reimbursement
- Money received from a roommate to pay their share of the rent
- Money received from a loved one as a gift
- Money received from selling a personal item at a loss. For example, if you purchased a t-shirt for $100 and sold it for $50, the amount is not taxable.
The IRS is cracking down on payments received through apps, such as Cash App, Zelle, or Payal to ensure those using the third-party payment networks are paying their fair share of taxes so we recommend that you keep good records such as bank statements, receipts, invoices, and other financial documents to reflect taxable income for Tax Reporting.
Stay tuned because we will be sharing more news about this soon.