(NEXSTAR) – How the IRS treats payment apps like Venmo and Cash App has been anything but straightforward in recent years, leaving some taxpayers wondering what they will need to report in 2024. You may be thinking.
For most people, how they use the app is the deciding factor.
“The bottom line is that if you receive business income through an app, you must report it to the IRS, but taxpayers still have to report it to the IRS even if your friend reimbursed you $2,000 for dinner and Taylor Swift tickets last summer. , you shouldn’t expect a 1099-K,” the tax accountant said. AB Tax Law Adam Brewer told Nexstar.
But for many small business owners and second-time business owners who use payment apps as part of their livelihood, the answer is a little more complicated.
Some payment app users were bracing for the IRS to introduce new rules requiring sales of goods and services over $600 to be reported to the Internal Revenue Service using Form 1099-K. .
Then, in late 2023, the IRS announced that it would postpone the $600 rule, leaving the previous standard of having at least 200 transactions of $20,000 or more when a taxpayer files their 2024 return. The IRS said this action was taken to reduce confusion.
At the state level, reporting thresholds can be set as follows: quite lowaccording to Venmo.
- Maryland (Maryland): ≥ $600
- Massachusetts (MA): ≥ $600
- Vermont (Vermont): ≥ $600
- Virginia (VA): ≥ $600
- Illinois (IL): > $1,000 and 4 or more separate transactions
For the 2024 tax year, the IRS will move the threshold to $5,000, with the $600 limit going into effect the following year. This means any business transaction over $600 will trigger a 1099-K form, and Venmo, Paypal, Cash App, etc. will apply. create.
Unfortunately, paying taxes on payment app business income isn’t just tied to the 1099-K form.
“If you receive business income through Venmo or Cash App, you should always report that income, regardless of whether you receive a Form 1099-K,” Brewer said.
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