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.

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.

Anonymous wrote:Zelle says they won't be issuing 1099-k since the law does not apply to an ACH network.

https://www.zellepay.com/faq/does-zelle-report-how-much-money-i-receive-irs

https://www.cpapracticeadvisor.com/2022/11/18/zelle-is-being-used-by-small-business-owner/73295/#:~:text=But%20if%20you%20use%20third,in%20payments%20during%20the%20year.

https://www.pymnts.com/taxes/2022/zelle-says-its-service-not-subject-to-irs-reporting/

And that’s because there is already information reporting in place for bank transactions.

Zelle says they won't be issuing 1099-k since the law does not apply to an ACH network.

https://www.zellepay.com/faq/does-zelle-report-how-much-money-i-receive-irs

https://www.cpapracticeadvisor.com/2022/11/18/zelle-is-being-used-by-small-business-owner/73295/#:~:text=But%20if%20you%20use%20third,in%20payments%20during%20the%20year.

https://www.pymnts.com/taxes/2022/zelle-says-its-service-not-subject-to-irs-reporting/

Anonymous wrote:I send my husband my half of our rent through Venmo because it processes faster than PayPal. Maybe that’s not good

The unlimited marital deduction allows spouses to transfer an unlimited amount of money to one another, including upon death, without penalty or tax.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

But the principal of the thing is that billionaires pay almost none of their fair share, yet people who are just trying to pay the rent are going to have a harder time doing so. You see how this sucks, right? People making 6 figures aren't getting paid through venmo and cheating uncle sam. It's people barely making ends meet.

This is not necessarily true. We pay for our lawn service (we have 7 acres) through Venmo to the tune of about $1000 a month in the summer months. They run a pretty sophisticated operation and take care of many properties. I have no doubt they are bringing in income in the six figures. The new requirements, I suspect, is to track businesses like theirs.

Somebody making a little cash on a side hustle and getting paid through Venmo is extremely unlikely to be audited. So they can probably take the risk if they want to cheat. Personally, I think it’s really stupid to cheat on your taxes because it’s not worth the trouble and the consequences can be dire if you’re caught. But that’s just me.

Assuming the person with a business is being paid for goods and services this is actually not true as the IRS uses form matching to catch these transactions much like if you fail to report W-2 income. The IRS will usually send you a notice either adjusting your refund downward or a bill rather than what you might think of as a traditional audit.

I guess you’re right. But that’s not what I think of when I think of being audited. I’ve been audited and trust me, it involves a lot more than that.

Right, but my point is that one won't be able to hide the income regardless of the characterization of the enforcement mechanism.

I send my husband my half of our rent through Venmo because it processes faster than PayPal. Maybe that’s not good

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

But the principal of the thing is that billionaires pay almost none of their fair share, yet people who are just trying to pay the rent are going to have a harder time doing so. You see how this sucks, right? People making 6 figures aren't getting paid through venmo and cheating uncle sam. It's people barely making ends meet.

This is not necessarily true. We pay for our lawn service (we have 7 acres) through Venmo to the tune of about $1000 a month in the summer months. They run a pretty sophisticated operation and take care of many properties. I have no doubt they are bringing in income in the six figures. The new requirements, I suspect, is to track businesses like theirs.

Somebody making a little cash on a side hustle and getting paid through Venmo is extremely unlikely to be audited. So they can probably take the risk if they want to cheat. Personally, I think it’s really stupid to cheat on your taxes because it’s not worth the trouble and the consequences can be dire if you’re caught. But that’s just me.

Assuming the person with a business is being paid for goods and services this is actually not true as the IRS uses form matching to catch these transactions much like if you fail to report W-2 income. The IRS will usually send you a notice either adjusting your refund downward or a bill rather than what you might think of as a traditional audit.

I guess you’re right. But that’s not what I think of when I think of being audited. I’ve been audited and trust me, it involves a lot more than that.

Anonymous wrote:

Anonymous wrote:

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.

But the principal of the thing is that billionaires pay almost none of their fair share, yet people who are just trying to pay the rent are going to have a harder time doing so. You see how this sucks, right? People making 6 figures aren't getting paid through venmo and cheating uncle sam. It's people barely making ends meet.

This is not necessarily true. We pay for our lawn service (we have 7 acres) through Venmo to the tune of about $1000 a month in the summer months. They run a pretty sophisticated operation and take care of many properties. I have no doubt they are bringing in income in the six figures. The new requirements, I suspect, is to track businesses like theirs.

Somebody making a little cash on a side hustle and getting paid through Venmo is extremely unlikely to be audited. So they can probably take the risk if they want to cheat. Personally, I think it’s really stupid to cheat on your taxes because it’s not worth the trouble and the consequences can be dire if you’re caught. But that’s just me.

Assuming the person with a business is being paid for goods and services this is actually not true as the IRS uses form matching to catch these transactions much like if you fail to report W-2 income. The IRS will usually send you a notice either adjusting your refund downward or a bill rather than what you might think of as a traditional audit.

Anonymous wrote:

Anonymous wrote:Practically I think this is kind of a disaster. People who run small businesses have been using it as a tax cheat, but it’s going o be hard to distinguish between those people and the people that are collecting money for the class teacher gift or the shared summer rental or whatever. I’m not sure what the irs is going to do with all this information.

Agree. If I'm a therapist and getting paid $500 per session on Venmo, couldn't I just say it was a friend paying me back for a trip or something like that? I guess if you are regularly getting large payments from the same people it might be harder to justify those amounts as someone paying you back. I used the therapist example because my friend is a therapist and she got audited last year, in part because so many of her payments were on Venmo. Now she doesn't want to be reimbursed through Venmo for anything because she wants it to be work only to avoid confusion if she gets audited again. I think small biz folks might end up going in that direction so they don't accidentally report a BBQ reimbursement as income.

Your friend didn’t get audited because she was paid by Venmo. She got audited either because there was something fishy on her return or she just got unlucky in the draw. Then, once she got audited, they looked at her Venmo.

Auditors are not idiots. They can tell which payments are for services and which are of the more random, reimbursement type. Also, all she has to do is set up a business account on Venmo that’s separate from her personal account.

Anonymous wrote:Practically I think this is kind of a disaster. People who run small businesses have been using it as a tax cheat, but it’s going o be hard to distinguish between those people and the people that are collecting money for the class teacher gift or the shared summer rental or whatever. I’m not sure what the irs is going to do with all this information.

Agree. If I'm a therapist and getting paid $500 per session on Venmo, couldn't I just say it was a friend paying me back for a trip or something like that? I guess if you are regularly getting large payments from the same people it might be harder to justify those amounts as someone paying you back. I used the therapist example because my friend is a therapist and she got audited last year, in part because so many of her payments were on Venmo. Now she doesn't want to be reimbursed through Venmo for anything because she wants it to be work only to avoid confusion if she gets audited again. I think small biz folks might end up going in that direction so they don't accidentally report a BBQ reimbursement as income.

Anonymous wrote:

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.

But the principal of the thing is that billionaires pay almost none of their fair share, yet people who are just trying to pay the rent are going to have a harder time doing so. You see how this sucks, right? People making 6 figures aren't getting paid through venmo and cheating uncle sam. It's people barely making ends meet.

This is not necessarily true. We pay for our lawn service (we have 7 acres) through Venmo to the tune of about $1000 a month in the summer months. They run a pretty sophisticated operation and take care of many properties. I have no doubt they are bringing in income in the six figures. The new requirements, I suspect, is to track businesses like theirs.

Somebody making a little cash on a side hustle and getting paid through Venmo is extremely unlikely to be audited. So they can probably take the risk if they want to cheat. Personally, I think it’s really stupid to cheat on your taxes because it’s not worth the trouble and the consequences can be dire if you’re caught. But that’s just me.

Anonymous wrote:

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.

But the principal of the thing is that billionaires pay almost none of their fair share, yet people who are just trying to pay the rent are going to have a harder time doing so. You see how this sucks, right? People making 6 figures aren't getting paid through venmo and cheating uncle sam. It's people barely making ends meet.

Except that is less a tax enforcement phenomenon than it is a tax policy phenomenon. The IRS didn't invent carried interest, trusts, preferential capital gains rates, tax-free municipal bonds and the other tools billionaires use to reduce their taxable income. Congress did.

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.

But the principal of the thing is that billionaires pay almost none of their fair share, yet people who are just trying to pay the rent are going to have a harder time doing so. You see how this sucks, right? People making 6 figures aren't getting paid through venmo and cheating uncle sam. It's people barely making ends meet.

This shift is largely going to impact people being audited. If you are using Venmo or Zelle for reimbursement or gifts with friends and family, this will have no impact on you whatsoever -- those transactions will be tagged as "friends and family" and with the exception of a very large gift that could trigger taxation, the IRS will not care.

But for people who are cheating on their income taxes by accepting payments via these services and then not reporting it, the rule change now means that if you GET CAUGHT either mistagging these transactions (i.e. having the people who you do dog walking for tag your payments as "friends and family") or accepting payments via these services and no reporting them in your taxable income, then you will be assessed back taxes and penalties.

While this was technically always true, the IRS is getting more participation from these services now, which now must have users tag their transactions so that taxable transactions are flagged, issue 1099s for these transactions, and likely also include language in their terms of service that more explicitly explains a user's tax obligations.

This will only impact people using these services to get paid, and even now it will be possible to cheat, but don't be surprised if Venmo/Zelle/Paypal/CashApp start doing stuff like flagging regular transactions ("We've noticed this transaction always occurs on the 4th of the month -- usually transactions with this pattern are for "goods and services." Has it been mistagged? Please review your tax obligations for income at www.irs.gov") because part of what is happening here is that the IRS is asking these services to be more responsible in not allowing them to be used to hide income. And the IRS has quite a bit of power when it wants organizations to facilitate tax collection.