Payment Apps & Tax Form 1099-K

Описание: Howdy, this is David Groce, your Texas Tax and Law Man. Let’s talk about the IRS wanting to tax money you receive on Zelle, PayPal, Venmo, and apps like that.

Margaret Thatcher famously quipped, “Socialism is great until you run out of other people’s money.”

It’s a hard realization that Uncle Sam has a spending problem. They keep spending more than they are making in taxes. Their solution is to simply tax you and me more.

Bernie Sanders, the confessed socialist, wants to tax your credit card bonus points. The IRS has not come after that yet, but they sure would like to.

However, the IRS has announced its intention to make everyone report the money they receive via payment apps. They started in 2022 and delayed amidst public pushback. The IRS delayed again in late 2023. However, for 2024 the IRS has announced its new $5,000 threshold for making payment apps send 1099Ks.

Also, the 2024 Form 1040 will now have a place for us to report this 1099-K.

Even with this increased threshold, the IRS expects payment apps to send 44 million Form 1099-Ks.

As a compromise, the IRS indicates that taxpayers will not have to report these payment unless they meet two targets:
• Receive more than $20,000 per year and
• Have more than 200 transactions.

If this is truly the new threshold, then most people who split payment for a meal or give their kids money should be fine. For business owners receiving payment this way, they are probably already reporting these payments on their P&Ls.

But for those in the middle, welcome to the new rules.

If your business is growing and you need help making the next steps of creating an LLC or expanding your business, give us a call. We would love to help you, your family, or your friends. Until next time, adios.