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We’ve received a lot of questions about the tax ruling saying the IRS will require 1099’s on all payments over $600 through Venmo and other payment platforms. Here’s why you likely don’t need to worry…
As part of the American Rescue Plan Act, the government passed legislation forcing online payment platforms (Venmo, PayPal, Square, etc.) to report all cumulative business payments of $600 or more. This reporting would happen via a 1099-K tax form sent to the IRS and recipient.
These 1099’s, however, will only apply with business payments, or payments considered for “goods & services,” not for personal payments between individuals.
Therefore, folks don’t need to worry about this ruling when using Venmo for “peer to peer” transactions to reimburse friends for split dinners or to exchange funds for other everyday purposes.
This ruling basically just adjusted the previous $20,000 income (or 200 transaction) threshold that was previously in place. It’s not creating a tax issue for those who are using these payment platforms for everyday use.
It primarily affects business, as they now need to ensure they have separate profiles for business and personal, in order to ensure there’s no comingling and reporting issues.
Contact us if you have questions as it pertains to your specific situation…we’re happy to help!