So people will be taxed on venmo and zelle transactions?

[Anonymous]

Anonymous wrote:

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Anonymous wrote:Right, very little of the money I'm receiving via Venmo is income -- usually it's someone paying me back for an expense I covered all of and then we split after the fact. That isn't taxable. How am I supposed to report it to the IRS?

You aren't?

I guess we'll see if Venmo really does only send a 1099 for "goods and services" payments -- otherwise, this other kind of transaction will generate records sent to the IRS, which will mean that if you don't report them, they'll think you're failing to disclose income. (Which happened to me once for uncovered short sales of stock, and I got a letter from the IRS that I had to reply to to avoid a large additional tax bill.)

Okay, but you owed taxes in that case. In the case of a reimbursement you wouldn't owe taxes so they wouldn't ask you to pay them.

I did not owe taxes on uncovered short sales — they were open positions. I owed taxes after later covering them. But they were listed on a 1099 as if they were sales with a $0 cost basis.

[Anonymous]

Anonymous wrote:Yi think it’s only if it’s flagged as business. I allowed someone to use my beach house for only the cleaning fee. Instead of sending me the money as friend to friend he freaking flagged it as a business transaction. Not only die venmo take a slice now I’m gonna get a freaking 1099.

I hope you’ll never let him use your beach house again!
I had a buyer of a $5 item send me the payment as business transaction. I hope karma gets him

[Anonymous]

Has anyone received any rewards or payments for user research via PayPal? How do you think they are sent, as friends and family? And if it’s below $600 it is not reported right?

[Anonymous]

I pay lawn care company, sitters, cleaning lady, and kids’ tutors w Venmo. No idea how any of these parties are reporting income but I expect at least some (eg cleaning lady) are not declaring the income. How will these scenarios be treated? How will Venmo know who to send a form too?

[Anonymous]

Anonymous wrote:I pay lawn care company, sitters, cleaning lady, and kids’ tutors w Venmo. No idea how any of these parties are reporting income but I expect at least some (eg cleaning lady) are not declaring the income. How will these scenarios be treated? How will Venmo know who to send a form too?

We used to pay our cleaning lady by Venmo. She requested to change to checks this year. I think I know why. Kind of odd that apparently it's easier to evade taxes using a checking account.

[Anonymous]

Pisses me off when congress gets wined and dined, lots of perks, insider trading, and some cheat on their taxes. But they are going after small business owners. It used to be $20,000 that flagged the IRS and now it’s $600?? That’s quite a jump.

[Anonymous]

Anonymous wrote:This is going to be a gigantic pain in the ass.

Wait until tons of people get 1099 and have to spend time explaining that they got over $600 because they paid the entire restaurant bill for a group on their credit card, paid for a rental house with friends in vacation, etc. etc. Pain.in..the.ass.

I figured this would be coming..another reason I dont organize kids stuff

[Anonymous]

Anonymous wrote:Pisses me off when congress gets wined and dined, lots of perks, insider trading, and some cheat on their taxes. But they are going after small business owners. It used to be $20,000 that flagged the IRS and now it’s $600?? That’s quite a jump.

$600 has been a threshold for information reporting for decades

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think it became effective Jan 2022. So you can expect a 1099 from Venmo, PayPal, etc. in the next couple of months if you made over $600 on them this year.

I didn't, no small business here, but other people who have little side hustles will suffer. Although I see the point.

Doing by the book is not suffering. You pay tax because you are supposed to pay tax.

Yep, the Biden Admin is really sticking it to the Billionaires!!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Pisses me off when congress gets wined and dined, lots of perks, insider trading, and some cheat on their taxes. But they are going after small business owners. It used to be $20,000 that flagged the IRS and now it’s $600?? That’s quite a jump.

$600 has been a threshold for information reporting for decades

Why no inflation adjustment then? $600 today is quite different than $600 decades ago

[Anonymous]

Anonymous wrote:

Anonymous wrote:Pisses me off when congress gets wined and dined, lots of perks, insider trading, and some cheat on their taxes. But they are going after small business owners. It used to be $20,000 that flagged the IRS and now it’s $600?? That’s quite a jump.

$600 has been a threshold for information reporting for decades

That’s part of the problem though, isn’t it? $600 thirty years ago is different than $600 today.

[Anonymous]

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Anonymous wrote:I received about $1000 for a large Fourth of July party from several family members and put it all towards the food and drinks. Will this be taxed?

No. Nothing has changed regarding what's taxable income.

That doesn't mean anything. You think PayPal, Venmo, etc. are going to figure out why you received $1000+? No, they're just going to report it to the IRS, send you the 1099, anyway, no you'll be forced to prove you received $1000 to pay for a BBQ party. Pain.in.the.ass. we all know the govt will overzealous with their new army of IRS agents and try to argue and nauseum with people over proving that they received the money to pay for expenses. Ridiculous.

So much wrong with this reply.

1) It's not going to be a pain in the ass. There will be a line where you report whatever number is on the 1099 but then probably a line in which you offset or claim it's exempt or whatever. You only have to explain if you get audited. You probably won't get audited.

2) There's no "new army of IRS agents" with which you have to "argue." I suspect you are alluding to the hiring of new agents over the next decade to replace attrition of rank-and-file employees. It's not like they're all auditors, not even close, and all that's going to is staff the IRS at levels it should have been all along. So, stop with the inflammatory language.

Where is this line where I offset the 1099 income or claim it is exempt? Hint: it doesn't exist. If you get a 1099 that is wrong, and can't get the issuer to correct it, then your only option is to attach a statement to your return. Even if you do that, you will probably get an adjustment notice from the IRS and then you'll have to write them a bunch of letters trying to convince them that the 1099 is wrong.

NP. It's on your tax forms that you use to file. Not the 1099. You probably shouldn't be posting about things you know nothing about.

Guys, this is going to be similiar to 529s. All 529 distributions get reported as qualified distributions, whether you use the money for education or not. It is up to you to report it the correct way. If you don't, the only way the IRS finds out is if you are audited. This isn't hard.

I realize that. I have prepared my taxes for a long time. Please tell me what form number and line number this is. TYA.

Well, you will only receive the 1099-K from Venmo (or whoever) if you receive a payment for goods and services (NOT A PAYMENT FROM FAMILY & FRIENDS) therefore, you would be reporting that as income as you always have, either on your Schedule 1, Schedule C, or whatever form you use based on how your business has been established.

You're welcome.

You are deliberately avoiding the question. The issue is, what happens if you get a 1099 because someone incorrectly tagged a transaction as "goods or services." You claimed there was a line where you could just offset that. There is not.

One should report the 1099-K income on Line 1 of Schedule C and then back out the amount as an "Other Expense" on Line 27. We do this all of the time. You don't need to attach a statement. It would be helpful to be able to prove the 1099-K money was reimbursement, so anything you can do to document the original purchase would be helpful. But it isn't necessary unless you're audited. As long as your gross revenue on Line 1 matches the information on hand with the IRS, the computers should waive the return through the system.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I received about $1000 for a large Fourth of July party from several family members and put it all towards the food and drinks. Will this be taxed?

No. Nothing has changed regarding what's taxable income.

That doesn't mean anything. You think PayPal, Venmo, etc. are going to figure out why you received $1000+? No, they're just going to report it to the IRS, send you the 1099, anyway, no you'll be forced to prove you received $1000 to pay for a BBQ party. Pain.in.the.ass. we all know the govt will overzealous with their new army of IRS agents and try to argue and nauseum with people over proving that they received the money to pay for expenses. Ridiculous.

So much wrong with this reply.

1) It's not going to be a pain in the ass. There will be a line where you report whatever number is on the 1099 but then probably a line in which you offset or claim it's exempt or whatever. You only have to explain if you get audited. You probably won't get audited.

2) There's no "new army of IRS agents" with which you have to "argue." I suspect you are alluding to the hiring of new agents over the next decade to replace attrition of rank-and-file employees. It's not like they're all auditors, not even close, and all that's going to is staff the IRS at levels it should have been all along. So, stop with the inflammatory language.

Where is this line where I offset the 1099 income or claim it is exempt? Hint: it doesn't exist. If you get a 1099 that is wrong, and can't get the issuer to correct it, then your only option is to attach a statement to your return. Even if you do that, you will probably get an adjustment notice from the IRS and then you'll have to write them a bunch of letters trying to convince them that the 1099 is wrong.

NP. It's on your tax forms that you use to file. Not the 1099. You probably shouldn't be posting about things you know nothing about.

Guys, this is going to be similiar to 529s. All 529 distributions get reported as qualified distributions, whether you use the money for education or not. It is up to you to report it the correct way. If you don't, the only way the IRS finds out is if you are audited. This isn't hard.

I realize that. I have prepared my taxes for a long time. Please tell me what form number and line number this is. TYA.

Well, you will only receive the 1099-K from Venmo (or whoever) if you receive a payment for goods and services (NOT A PAYMENT FROM FAMILY & FRIENDS) therefore, you would be reporting that as income as you always have, either on your Schedule 1, Schedule C, or whatever form you use based on how your business has been established.

You're welcome.

You are deliberately avoiding the question. The issue is, what happens if you get a 1099 because someone incorrectly tagged a transaction as "goods or services." You claimed there was a line where you could just offset that. There is not.

One should report the 1099-K income on Line 1 of Schedule C and then back out the amount as an "Other Expense" on Line 27. We do this all of the time. You don't need to attach a statement. It would be helpful to be able to prove the 1099-K money was reimbursement, so anything you can do to document the original purchase would be helpful. But it isn't necessary unless you're audited. As long as your gross revenue on Line 1 matches the information on hand with the IRS, the computers should waive the return through the system.

Schedule C only applies if you are operating a business. We're talking about situations where the payee is not operating a business and gets a 1099 anyway because a payer incorrectly tagged the payment.

[Anonymous]

I see the data collection as just another data point they can go after tax cheats on IF you otherwise get tagged for an audit. They won’t do an audit on your $3K yearly side hustle. But if you’re moving $30K per month thru Venmo and no corresponding income tax reporting, you’ll get nailed. They will go after the whales on Venmo and Zelle, which likely are people engaged in otherwise pretty shady lines of business (drug dealing).

Further, true tax cheats tend to cheat on taxes in many different ways. When they get audited, the Venmo and Zelle data points are just more pieces of evidence for the IRS to use to build a broader and more impactful case.

In short, they are going to require you to attest that your Venmo and Zelle activity has corresponding expense offsets. For vast majority of people, that is true - the app is used for splitting expenses with various parties. If you lie about that, this gives the IRS another avenue for nailing tax cheats.

In the last two years, I’ve sent and received probably $35K thru these apps. Most of that has been for settling up shared vacation house expenses with friends. I’m not worried at all.

[Anonymous]

We outsource a lot and pay for kids activities through Venmo, Zelle, and PayPal.

This year at least three vendors I work with have asked to move to checks or cash because of this new rule. I am actually appalled at how many business are trying to avoid taxes - not sketchy people or businesses but people who coach kids, tutor, run insured and licensed companies. I will do checks but not cash.

There is a huge amount of tax evasion going on through these platforms. I’m glad the IRS is cracking down. I have always been a W2 or 1099 income person and it makes me angry that people cheat on taxes.