New Tax Laws for 2022 - Venmo, PayPal, Cash App, Etc.
Updated: Aug 26, 2022
Due to the American Rescue Plan, which was established last year, payment app providers like Venmo, PayPal, CashApp, etc. are all now required to issue you a Form 1099-K and report your earnings to the IRS for all business transactions of a combined total of $600 or more per year. This new law was created to make it tougher for someone to evade paying taxes they owe on business-related transactions. The law applies to payments for goods, services, and tips; however, personal transactions such as paying a friend back you for dinner, etc., are excluded.
One company exempt from this rule is Zelle because it facilitates messaging between financial institutions and doesn't put holds on accounts or handle the settlement of funds; therefore, they are not required to send out 1099-K's. This new law will apply to 2022 and beyond. Additionally, these new laws may change who you will need to send 1099-NECs to or change the amount you will need to report to the IRS from now on.
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