Payments of $600 or more for goods and services received through a third-party payment network, such as Venmo or CashApp, must now be reported to the IRS.
Third-party payment network providers will be required to send users a Form 1099-K, Payment Card and Third Party Network Transactions, by mail or electronically beginning Jan. 1, 2022, for transactions made during the 2022 tax year.
The new tax reporting requirement will apply to tax returns filed in 2022, as well as those filed in 2023.
The American Rescue Plan resulted in the new rule. President Joe Biden signed the $1.9 trillion stimulus package into law in March, which changed tax reporting requirements for third-party payment networks.
While most third-party payment networks are covered by this rule.
Only third-party payment companies that handle fund settlement (the process of transferring funds from a buyer to a seller in a transaction) must send 1099K forms to users, according to the law.
Prior to the law's implementation, the IRS required reporting if payments totaled more than $20,000 and there were more than 200 completed during the year.
How does this new law work?
Prior to this change, the IRS required payment card companies and third-party networks to issue Form 1099-K to report certain payment transactions that met the following criteria:
- Payments totaling more than $20,000
- In the current year, there have been over 200 transactions.
Users would be required to receive Form 1099-K for payments of goods and services exceeding $600 under the new law, which means that more people will receive the forms.
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June 05, 2022 at 10:27PM
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How does the IRS law work on $600 payments through apps? - Marca English
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