IRS Warning Americans to Report $600 Transactions From Payment Processors or Risk Facing Audit

The Internal Revenue Service reminds taxpayers to report transactions of at least $600 made through payment networks like Venmo, Paypal, and Cash App as the agency seeks to obtain data regarding part-time employment and side gigs, a move that critics have termed government overreach.

In a recent explainer posted online, the IRS said that according to the American Rescue Plan Act of 2021, any payment made after March 11, 2021, that exceeds $600 must be reported. The target of the new reporting rule is small business owners, and people working side hustles or part-time gigs for extra income. Earlier the reporting threshold was $20,000 and more than 200 transactions within a calendar year. But, the amended rule applies to a single transaction.

“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,” said the agency.

The reporting guidelines do not apply to noncommercial payments such rent, vacation, food, or one-time transactions like selling something online. The Form 1099-K will be sent by the payment platforms through which the transaction was done.

If a form is received by mistake, “contact the Payment Settlement Entity (PSE) listed on the Form 1099-K” or provide an explanation in the tax return, according to the agency.

Failure to report transactions on Form 1099-K could trigger an audit by the IRS since the agency receives a copy of the form.

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Author: HP McLovincraft

Seeker of rabbit holes. Pessimist. Libertine. Contrarian. Your huckleberry. Possibly true tales of sanity-blasting horror also known as abject reality. Prepare yourself. Veteran of a thousand psychic wars. I have seen the fnords. Deplatformed on Tumblr and Twitter.

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