VENMO, PayPal, Zelle, and Cash apps must report certain $600 transactions to the Internal Revenue Service under the new rules.
The online payment giants have been informed that from January 1, they must report commercial transactions of that value or higher.
Meaning that tax officers now want to see a 1099-K form from the app if one earns more than $600 per year in commercial payments.
That means millions of small business owners in the US have to follow the rules.
The move is part of the US Rescue Plan Act signed in March to help the US respond to Covid.
Previously, the IRS only required apps to let them know when a user had more than 200 commercial transactions totaling $20,000 per year.
The change does not apply to sharing dinners with friends.
PayPal said: “PayPal and Venmo provide a way for customers to tag their peer-to-peer (P2P) transactions as individuals/friends and family or goods and services by choosing the right category for per transaction.”
“Users should select Goods and Services whenever they send money to another user to purchase an item, such as a couch from a local ad listing or concert tickets, or pay for a service,” the service added.
In 2021, the average American will receive $2,775 in tax refunds, up 11% from the previous year, according to Internal Revenue Service.
Some just get their tax refund in early November 2021, after experiencing months of delays.
How much do you get back? your tax return depends on a number of factors including how early you file, government debt, and credit requirements.
When can I file taxes in 2022?
The IRS hasn’t opened yet electronic filing portal, but you can expect it to be available this month.
Last year, the filing of the 2020 tax return was delayed to February 12, 2021 as the agency needed more time to test its system and add a program to avoid delay in refunds.
This is mainly due to a major new law passed in late 2020, which includes changes to the tax law and $600 stimulus test.
When is my tax due?
This year’s deadline is not April 15, the date that usually marks IRS tax day.
That’s because April 16, 2022 is Liberation Day.
Emancipation Day commemorates when President Abraham Lincoln signed the District of Columbia’s Compensatory Emancipation Act into effect in 1862.
This act freed 3,000 enslaved people in the Washington, DC area.
The holiday has been celebrated in the DC area since 2005.
Since April 16 falls on a Saturday this year, the holiday will apply to Friday, April 15, pushing this year’s tax date to Monday, April 18 for most of the United States.
Monday, April 18 will also be the deadline to apply for a six-month extension to pay taxes.
What happens if I don’t pay taxes?
Failure to pay taxes on time may resulting in penalties worth hundreds of dollars.
For example, if you encounter the so-called “Not paying the penalty,” the IRS sends you a notice or a letter.
Expect a penalty of 5% of your unpaid taxes – which can go up to 25%, depending on how late you filed.
If you file your return more than 60 days late, you will have to pay a $435 penalty or 100% of the tax you owe – whichever is less.
It’s important to note that the IRS charges interest on penalties.
In 2021, people under the age of 65 earning less than $12,550 need not file a tax return.
Also, we explain why tax refund may be smaller in 2022.
In addition, a major change in 2022 will Allows savers to claim up to $2,000 in tax relief.
https://www.the-sun.com/money/4414508/venmo-paypal-zelle-cash-app-irs-new-rules/ Millions of US business owners face new rules as Venmo, PayPal, Zelle and Cash App must report $600 transactions to the IRS