Late last year, the IRS announced it would delay the new $600 Form 1099-K reporting threshold, but there's still a lot of confusion. In response, the IRS issued FAQs.
There is a big change coming to the U.S. tax code in 2023 that will affect just about anyone who uses the Internet to make a little, or a lot, of pocket money.
Why using Venmo or Paypal could create tax headaches in the coming weeks. A new change for 2022 means money-exchanging apps need to report more activity to the IRS.
k i need to pay my taxes. i have an obligation to pay my taxes. presumably the economy needs to do because this the gig economy has grown so large and so many aren't paying taxes. what should they be doing if not this? >> they should repeal this until, for starters, they have some idea what they're doing and they can tell the american people what they're doing. they're not picking up most phone calls that come in. less than 50%. maybe 20%. you call and say what do i do i got a 1099 k. i don't know what a 1099 k is. the government is being september information on you that you don't know about. they're sending you a note saying uh-oh this money. why? you can't call the irs and get through at present. that's a problem. and the privacy, your privacy doesn't exist anymore. you may remember when tens of thousands of irs documents,
reminder this week that all americans selling goods and services through sites like venmo and paypal will now have to report transactions of at least $600. before this year the filing form for 1099 k report was $20,000. but congress slashed the limit as part of the american rescue plan. now lawmakers have introduced bipartisan legislation to reverse the change. here to react americans for tax reform grover norquist. what's the significance of this? i'm seeing a lot, but you are the expert. >> this is a massive increase in the paperwork for all americans. if you use ebay or venmo or facebook marketplace, or stub hub or paypal, this is going to effect you. and if you clean out your garage and sell stuff for $1,000, unless you have the receipts, for what you originally paid, i are going to lose money you without although money for much more, you are now selling it second hand, you get $1,000.
venmo tells the federal government on this 1099 k form prove what you paid for it. otherwise, it's all income. you could end up audited. this is a massive and what do those 87,000 new irs agents going to do? go through people's $600 things that they sell or buy in their household woomplet. we were promised the tax bill was only going to go after the super rich. $600. they are targeting you and me and anyone who is online payment steve. >> brian: it would be different if i'm buying something. on venmo i want to give my roommate the rent money so that person can go pay for the rent. so i send over $900. i'm not -- i'm paying rent. but i'm going to get taxed on the rent, the $900 i just sent to my roommate to pay the $1,800 that we owe for rent that month? >> it is unclear. the regulations have not -- this effects this year's taxes.
>> that's actually really good advice. i'm taking note of all of this. so venmo, paypal, cash app and other mobile payment apps now have to tell the irs if you make more than $600 a year on their platforms. how does this change tax season, first of all, for businesses that use these apps? >> so it won't happen this year. that new reporting rule goes in effect next year, but what people are finding now is that if they're making payments to services or they're exacting payments, selling goods on these websites you're going to start seeing these notices that you have to verify your tax information and that's because, at the end of this year, they're going to be sending you a 1099 k for all that business you generated. this is a first time this has happened for a lot of these small business people, gig workers, they didn't have to report it unless they had $20,000 and 200 transactions, so it's going to be a surprise for a lot of people, and really, the target is people who are