A new tax rule could have a huge impact on people who use third-party payment apps like PayPal, Venmo and Zelle.
We're more than halfway through 2024, which also means we're about halfway to tax season. And if you use these third-party sites for business transactions, there's a good chance the Internal Revenue Service (IRS) wants to monitor your activity.
In a time of electronics, you probably use popular apps like Zelle, Venmo, Paypal and others. Since their inception, people would fill out a form 1099 if they made more than $20,000 through those apps.
That's about to change. Starting with tax year 2024, the number has gone down to $5,000. It's all part of the 2021 American Rescue Plan. The IRS initially wanted the new rule to take effect in 2023, but confusion led the agency to push it back a year.
"They changed it to this tax year to $5,000," Steber said. "If you have $5,000 worth of transactions, and we are talking business here, then that will get a 1099 sent to the IRS."
The threshold for reporting third-party payments will eventually go down to $600. Reporting requirements do not apply to personal transactions, like birthday or holiday gifts. It also doesn't apply to family members who split the cost of household bills or other fees. This is strictly for businesses that use third-party apps for payments. #Verify #Money #IRS
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