The IRS has granted online sellers who use Venmo and other website and phone payment apps will get a reprieve this year. The IRS announced on November 21, 2023, that it will delay implementing new reporting requirements that were to take effect for the coming tax filing season.
Originally, app users who made $600 or more selling goods and services would have been required to report those transactions to the IRS, a new threshold required by the American Rescue Plan passed in March 2021.
Instead, payment apps and online marketplaces will send out separate tax forms — called 1099-K documents — for taxpayers who receive over $20,000 and make over 200 transactions selling goods or services.
For 2024, the basic reporting threshold will be increased from $600 to $5,000, the IRS said.
IRS officials say one reason for the delay is taxpayer confusion over what sorts of transaction are reportable.
For instance, peer-to-peer transactions, like selling a couch or car, sending rent to a roommate, and buying concert tickets would not be reportable, whereas other purchases would apply.
It is clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others.
A provision in the American Rescue Plan requires users to report transactions through payment apps including Venmo, Cash App and others for goods and services meeting or exceeding $600 in a calendar year. Before that provision — and now for this year — the reporting requirement applied only to the sale of goods and services to taxpayers who receive over $20,000 and have over 200 transactions.
About This Article
This article was originally published in The Talking Taxes Newsletter™ and consists of educational materials; it should not be construed as financial, tax, or legal advice. Prepared by TheTax-Adviser.com, a trusted source of independent federal, state and local tax ideas, it provides free educational resources and connects users with a network of independent Fee-Only financial advisers, accountants, attorneys and other professionals. For 100% Independent and 100% Objective Advice℠, schedule a FREE consultation today at 1800ADVISER.com, the only toll-free online directory of independent Fee-Only professionals. Both TheTax-Adviser.com, and 1800Adviser.com are owned and operated by The Independent Adviser Corporation. For additional information, please refer to their Privacy Policy and Terms of Use, Legal Notice, and Disclaimer.
