New tax rule requires money apps to report transactions totaling more than $600/year

SHREVEPORT-BOSSIER, La. (KTAL/KMSS) – Third-party cash apps like Venmo, Paypal, and Money App are required to report enterprise transactions of greater than $600 per yr to the IRS, because of a change within the tax code that took impact on Jan. 1, 2022.

“Effectively, heard about it, however principally on the identical time, it’s one thing like a bank card swipe. Your machine goes to cost you too, so it simply retains up with the fee. I don’t have an issue with it,” stated Karl Blake, who owns Home made Meals in Bossier Metropolis.

The funds are solely taxed if the cash is obtained as a superb or service. Items and donations are exempt.
The brand new rule, signed into legislation as a part of the American Rescue Plan Act, permits the IRS to trace how a lot cash companies truly earn via the apps no matter what they placed on the 1099-Okay type.

Beforehand, cell fee apps solely needed to inform the tax authorities when an individual had over 200 industrial transactions per yr that exceeded $20,000 in whole worth, according to the IRS.

“It’s going to make individuals need to pay a bit of bit extra consideration to what they’re placing on their taxes as nicely,” stated Alexandra Perry, proprietor of The Favored Get together in Shreveport. “Typically as small companies, we get lots of donations and lots of presents from household and associates. So we’re going to need to be extra particular on that as nicely.”

“I do really feel like different companies are going to go round that in order that they don’t need to pay taxes or discover totally different avenues to get money versus going via Paypal or Venmo or these companies,” Perry stated.

“Should you bought Money App or Venmo and that’s how you bought to pay, we most positively going to just accept it. Easy, we’re going to just accept your fee,” Blake stated.

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New tax rule requires money apps to report transactions totaling more than $600/year

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