December 28, 2022
Still confused about those tax reporting requirements for more than $600 in business income from Venmo, PayPal or CashApp?
Well, the IRS just released a brand new frequently asked question document that may help sort things out.
I told you in this video earlier today that the IRS will not be enforcing the $600 business income threshold from any of those digital payment platforms this year. Instead, this year would be a transition year. But there are some things the FAQ clears up.
The big one — regardless of the income threshold whether it’s $1, $600 or $20,000, you are required to pay taxes on all business income regardless of if it comes from a check, cash or a digital payment platform. Let’s make that clear. What the IRS is saying now — is that it’s not enforcing the $600 threshold for business income received through one of those digital payment platforms for 2022. Instead the IRS will enforce the threshold from previous years for those digital payment platforms which is either 200 transactions or $20,000 dollars collected in one taxable year.
We already know Venmo, PayPal and CashApp qualify as a digital payment platform but the new FAQ also defines exactly how you can determine whether the specific payment platform you’re using also qualifies.
It also explains what to do if you receive a 1099 from one of the digital payment platforms and it has personal transactions mislabeled as business income.
Read the IRS FAQ here.
