Starting in 2022 the IRS has issued new 1099 reporting requirements requiring Venmo, PayPal, Cash App to report business transactions of $600 or more to the IRS. What does this mean for the individual taxpayer? If I give money to my relatives over Chinese New Years does that mean I need to issue them a 1099?
There has been a lot of misconceptions from individuals thinking that this reporting change is going to cause taxpayers to pay more taxes on transactions they were doing in the past. There are two major factors that make this not the case:
- The changes only apply to business accounts and sales of commercial goods & services
- Taxpayers were already required to report all income received anyways, whether they received a 1099 or not
Conclusion
Other than the issue of infringing on personal freedoms and personal privacy – this new change won’t (or shouldn’t) make much difference in the individual taxpayer’s lives, assuming they were reporting their taxes correctly in the first place.
Businesses already had to report all income received in the course of doing business and the additional reporting requirements from the banking companies won’t change the way income is reported on their taxes.
Individuals won’t have to worry as this change effects only business accounts from the major institutions like CashApp, Venmo, and Paypal and again, all income that was received should have been reported anyways on prior tax returns.
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This tax information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Booked Financial LLC recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager. Depending on the nature of your business there are different variables that would make one option better than the other. Please understand these before choosing to deduct expenses under actual or standard mileage on your tax returns.