January 6, 2023 - Recently Congress enacted a change to the tax code about how transactions in apps like Venmo, CashApp, Etsy, StubHub and Air BNB needed to be tracked and reported for tax purposes. The new rule was supposed to go into effect this year. The IRS recently stated they are delaying the implementation of the new rule for one year. That is good news.
The new rule will require those apps to report to taxpayers on Form 1099-K, when they have over $600 in transactions for goods and services (the current threshold is $20,000). This information will also be reported to the IRS. It can cause confusion for many taxpayers who regularly use these apps to send and receive cash. Since all transactions that meet the threshold are reported, taxpayers need to keep good records of which transactions had a business purpose and which were personal.
The delay with implementing the new rule will allows apps to gear up for the reporting requirement and taxpayers to ensure they can identify personal transactions from business transactions.
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