The Internal Revenue Service (IRS) reminded taxpayers to report transactions of at least $600 made through digital apps like Venmo, Paypal, and Cash App as the Biden administration continues to take more tax money from hard-working Americans.
In a recent explainer posted online, the IRS said that any payment made after March 11, 2021, that exceeds $600 must be reported, thanks to President Joe Biden’s American Rescue Plan Act of 2021.
“You should receive Form 1099-K by January 31 if, in the prior calendar year, you received payments from all payment card transactions (e.g., debit, credit, or stored-value cards), and in settlement of third-party payment network transactions above the minimum reporting thresholds,” the agency said.
The new tax rule is aimed at small business owners and people who work side jobs or part-time jobs to supplement their income.
The previous provision was that businesses only had to give the IRS a 1099-K if they had over 200 transactions and earnings of over $200,000, but the new regulation means they will now have to account for everything they earn as well, which could lead to hiring fewer small-time operators.
Noncommercial payments such as rent, vacation, meals, and one-time transactions such as online purchases are exempt from reporting requirements. The payment platforms used for the transaction will send the Form 1099-K to you.
The American Rescue Plan Act of 2021, or COVID-19 Stimulus Package, is a $1.9 trillion economic plan passed by Congress and signed into law by Biden on March 11, 2021. With the exception of one Democrat, the final revised bill was approved by the House with all Republicans voting against it.
The law has been criticized as an example of government intrusion into Americans’ personal finances and for its severe tax provisions that will affect small business owners and everyday citizens who are trying to make ends meet.
The rapid inflation has already forced many Americans to take side gigs just to make ends meet—from crafting on Etsy to driving Uber to renting out a room on Airbnb—and now the government wants more of our hard-earned money.
“There’s an enormous tax gap in the U.S. estimated at $7 [trillion] over the next 10 years in terms of a short fall of tax collections to what we believe are owed,” said Treasury Secretary Janel Yellen in an interview last year. “It comes from places where the information on income is opaque and can be hidden.”
