IRS to tax business transactions on cash apps

Published: Oct. 18, 2021 at 7:28 AM PDT
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RENO, Nev. (KOLO) - Posts on social media are causing confusion on what some can expect to see during tax season next year. The posts claim the IRS will tax all payments of $600 or more made on those kinds of apps that are.

That’s not entirely true. The real policy comes from the American Rescue Plan Act, and stipulates a tax form called a 1099-K be filed for all business owners earning $600 a year or more on payments received through these apps. The original threshold amount was $20,000. Personal transactions, such as paying someone back for dinner or rent, don’t count.

David Harger, an accountant in Reno, says if you have any concerns about this new law, make sure to keep a record of everything.

“Report it all. Here’s my 1099, right? The IRS got the 1099. It better show up on your return or your getting a letter. Let’s put it all on your tax return and then let’s back it all up. If none of it’s taxable, then you’ve done your part.”

This policy is set to go into effect in January 2022.

A similar claim found on social media socials is that the IRS will monitor all transactions of $600 or more involving bank accounts. That’s not true, but could come from a policy proposed by the Biden administration. It would require banks to report the total amount of money deposited and withdrawn from personal and business accounts on an yearly basis. Banks would also not be able to report any individual transactions

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