Cash App venmo and Paypal transactions over 600$ to be reported to IRS (internal service revenue). This plan was included in the American rescue plan of 2021 and took effect on Jan 1 2022. All transactions totalling 600$ over a year are to be reported by third-party payment apps to the Internal service revenue.
Earlier before the legislation, payment platforms will only report to IRS if you had 200 commercial transactions with over $20,000 at the end of the year.
So if you are self-employed, have a side hustle or run a freelance service, keep track of your taxable and non-taxable income as your payment platforms will start reaching out to you to fill IRS 1099-K tax form from IRS.
However, the IRS is not counting payments sent through family and friends, gifts, donations, favours to be taxable and also goods sold at a loss. For instance, if you buy a table for 500$ and you sold it at the marketplace for 200$, you will not be taxed because you sold it at a loss.
However, IRS might require backing documentations to know if you truly bought the original product for that price and you sold at a loss.
Have you done transactions more than $600 this year? lets know in the comment box
