01/01/2022
Public Service Announcement
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If you use Zelle, CashApp, Venmo, or another peer-to-peer cash transferring platform, KEEP READING:
The Biden Administration passed a new tax rule in the American Rescue Plan Act and it is being dubbed "The $600 Tax Rule."
Starting January 1, 2022 if you receive $600 or more in a year on a peer-to-peer cash transfer platform you will receive a 1099-K form (for income reporting purposes). You are federally required to report that money as taxable income.
So if you SELL items online and use these cash transferring platforms, you must provide the IRS with receipts that prove you paid more than what you sold them for so the money you collect is not considered taxable income.
The purpose of this is to "close the tax gap." My friends, please keep track of your big ticket purchase receipts in case you ever decide to sell, and ask to be paid in CASH if it is not for business purposes.
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Why is this good???
So the government can crack down on people not claiming taxable income on goods or services sold via peer-to-peer cash transfer platforms.
Why is this bad???
Because if you sell your old couch or loan money to a friend who pays you back via Zelle, Venmo, etc. you will have to pay taxes on the sale of your couch if you cannot provide a receipt, and you have to explain to the IRS why you gifted your bestie money and then you might have to pay taxes on the money you loaned them when they pay you back. The list goes on...
Summary of H.R.1319 - 117th Congress (2021-2022): American Rescue Plan Act of 2021
