Money (Photo by Chung Sung-Jun/Getty Images)
“I’m a be fresh as hell if the Feds watching,” 2 Chainz said it best! Roommates, it looks like peer-to-peer (P2P) payment systems like Venmo, PayPal, Zelle, and CashApp are making a change that could affect everyone. According to NBC News, 2022 marked a change with the American Revenue Plan tax code due to the COVID-19 response bill passed last March. This means that these P2P payment applications are now required to report commercial transactions totaling more than $600 per year to the Internal Revenue Service (IRS).
Before the change, the mobile apps only had to advise the IRS when individuals had over 200 commercial transactions per year that exceeded $20,000 in total value. The new change now states a person accruing more than $600 annually must file and furnish a 1099K form. The tax reporting change only applies to commercial charges and services. If you’re not sure exactly what that means, I’ll break it down. You don’t have to worry about reporting transactions for anything personal, including charges to friends or family. For example, if you go out to dinner and split the bill, don’t worry about reporting that transaction.
In addition, these changes also apply to people who sell items on sites such as eBay or those who have a side hustle and have sites selling holiday crafts, as long as they accept credit card payments through these apps. PayPal released a statement regarding the change, saying both PayPal and Venmo offer a way for customers to tag their peer-to-peer (P2P) transactions as either personal/friends and family or goods and services by choosing the appropriate category for each transaction.”
The statement continued, “Users should select Goods and Services whenever they are sending money to another user to purchase an item, like a couch from a local ad listing or concert tickets, or paying for a service,” PayPal said. Roomies, how do you feel about the change?
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