IRS adjusts income reporting rules for apps like Venmo and PayPal
Source: CBS 13 News
Small businesses and freelancers using payment platforms like Venmo and PayPal will face new IRS reporting requirements this tax season, with income thresholds gradually decreasing over the next few years. Starting this year, payment platforms are required to issue Form 1099-K for transactions totaling $600 or more annually, a significant reduction from the previous $20,000 threshold for 200+ transactions. This change means that even smaller transactions can trigger tax reporting, making it essential for individuals and businesses to carefully track their income.
For those unprepared, this shift could lead to unexpected tax obligations or penalties. It's crucial to distinguish personal payments from business-related transactions and maintain accurate financial records to ensure compliance. With these changes, consulting a tax professional or utilizing accounting software can help navigate the new requirements and avoid any surprises during tax filing.
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