1099-K from third party payment apps - 2022 Changes
What is a 1099-K - form received by a business or individual for payments received during the previous tax year.
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When: In 2022 the IRS changed the regulations when they introduced the American Rescue Plan Act of 2021 minimum requirements for this form. Prior to 2022, businesses would generally receive a 1099-K tax form only when gross payments exceeded $20,000 for the year and the business conducted at least 200 transactions. As of the 2022 change in rules for the 1099-K, the gross payments threshold has been lowered to just over $600 for the year, and the transactions threshold no longer applies. Therefore businesses had a much higher reporting threshold before receiving a 1099-K. Because of the changes, many businesses received this form for the first time.
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Who: This affects all individuals and businesses using these third party apps. Specifics for a few of the major ones shown below. Changes to the 1099-K threshold may impact many small businesses. Even if you’re primarily a cash-heavy business that only occasionally uses third-party payment apps, Form 1099-K could arrive in your mailbox or inbox.
VENMO
You can decide from inside a personal profile which transactions are for business goods and services. This will be automatic for any business accounts. To tell if you have a business or personal profile go to Venmo > Profile. If you see "Create a business profile" like in the screenshot below you have a personal account. If you do not see that you should have a business account.
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They will automatically send out a 1099 for anyone that qualifies for the year with transactions greater than $600.
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Link to Venmo for add'l details: HERE
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How to tag payments for friends/family so they are not included: FIND OUT HERE
PAYPAL
You can decide from inside a personal profile which transactions are for business goods and services. This will be automatic for any business accounts. To tell if you have a business or personal profile go to Paypal > Select your name in upper right hand corner > Profile settings > scroll to the bottom to see your account type, see screenshot.
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They will automatically send out a 1099 for anyone that qualifies for the year with transactions greater than $600.
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Link to Paypal for add'l details: HERE
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How to tag payments for friends/family so they are not included: FIND OUT HERE
CASH APP
If you have a standard, non-business Cash App account, you don’t need to worry about Form 1099-K. Cash App won’t report any of your personal transactions to the IRS.
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If you use Cash App to sell goods or services, we recommend that you upgrade to a Cash for Business account to ensure accurate tax reporting.
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Link to Cash App for add'l details: HERE
ZELLE
Zelle does not remit information to the IRS from their platform.
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Link to Zelle for add'l details: HERE