Payment Apps Will Now Report Transactions of $600 or More to the IRS

There is a new law that will require apps like Venmo, Paypal, Cash App, and Zelle to report transactions that are $600 or more.

I have a lot of friends that use these kinds of apps to receive payment for items they sell like makeup, arts and crafts, jewelry, etc. So if you run a business or have a side hustle and accept these forms of payment then you need to listen up.

If you receive a payment of $600 or more on one of these apps then a 1099-K form will be generated which you will need to file with your tax returns.

This is a new law that came about when Congress passed the American Rescue Plan on February 27, 2021.

This reporting requirement will only be applied to payments for goods and services and not to any transaction labeled 'friends or family.'

Financial experts are advising that if you do use one of these apps to pick only one and utilize that one app. It will make it easier when you go to file your taxes if all of your information is in one central location.

A couple of things to note here:

Businesses will not need to worry about this until the 2022 tax filing season.

These payments apps may request additional information from their users in the near future. Don't be alarmed if you receive a request from these apps for information like your social security number or Employer Identification Number. They will be collecting this information so that they can properly report your transactions.