Americans are worried about a new tax reporting requirement that will force apps like Venmo, Cash App, Paypal, Airbnb and Ebay to submit 1099-K forms to users. The U.S. Internal Revenue Service (IRS) pays special attention to payments of $600 or more for goods and services received through a third-party payment network.
US Residents Think Form 1099-K Will Cause Headaches – IRS Says It’s Important ‘Records Reflect Business Income’
A new tax reporting requirement from the IRS will require third-party payment processors to send users who receive payments of $600 or more for goods and services a form 1099-K. Third parties must send the form to users by mail or electronically for transactions that occurred during the 2022 tax year. The new rule has left many Americans worried about part-time jobs, part-time jobs, and under-the-table income.
Janet Yellen defended the IRS requirement to require US banks to report all transactions over $600.
Here’s a better idea: How about she reveal the several million speaking fees she’s received over the past few years from banks?
— conspiracybot (@conspiracyb0t) June 3, 2022
In addition, new tax reporting requirements may affect cryptocurrency users, as certain applications that process digital currencies will treat transactions as payments. For example, payment processors such as Paypal and Cash App allow customers to accept and make payments using cryptoassets. The new rule, stemming from the IRS and a direct result of the recently enacted American Rescue Plan, represents a significant improvement over rule 1099-K in the past.
Prior to the adoption of the American Plan of Rescue, the IRS initially oversaw payments in excess of $20,000 from people using third-party payment apps. Similar to the current $600 threshold, if a payment application user exceeds the limit, the user must submit Form 1099-K.
Moreover, when the threshold was $20K, the previous requirement also stated that it must be 200 transactions or more. Today, IRS summary 1099-K states that “any number of transactions” must be reported if the payment exceeds $600.
“It is important that your business books and records reflect your business income, including any amounts that may be shown on Form 1099-K,” the IRS website says. notes. “You must list on your income tax return all the income you receive from your business.”
Tax Foundation Analyst Says ‘Administrative Burden of Tax Claims Is a Pain’
Americans working in the gig economy and freelancers using third-party payment apps are concerned that the work will be a waste of time if the IRS taxes them. “I love being a freelancer, but a big part of why I love it is that I can pocket extra money when I decide to work overtime.” – Child Care Worker said New York Post on Thursday.
Pretty confusing given the new tax administration law that if you make $600 through online transactions you have to pay tax, so getting money from friends when you split the account would count as “income” and you’re going to be taxed on everything . pic.twitter.com/4n6yUWmAlP
— Brian Farley (@BFar0320) June 9, 2022
A conversation with Bloomberg, an anonymous commission clothing seller said the new rule will be a headache. An anonymous person said she sold old clothes on Depop, Ebay and Facebook Marketplace, earning about $15,000 a year. She is concerned that the new 1099-K requirement will force her to “monitor everything”.
The IRS wants to control how you spend $600 when it’s reportedly costing the US Navy $25,000 just to turn an aircraft carrier.
— Ohio Libertarian Party (@LPOhio) June 5, 2022
This was stated by the federal analyst of the Tax Fund Alex Muresianu. explained that the IRS tax requirements would be a significant burden. “The administrative burden of figuring out taxes for something like this is such a pain that some people might decide it’s not worth it,” Muresianu said. “And I doubt the IRS is going to make a lot of money by taxing people’s $10,000 side jobs.”
What do you think about the 1099-K rule and the recently introduced $600 threshold? Let us know what you think about it in the comments section below.
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