Venmo, PayPal, And CashApp And Third-Party Payment Networks Proposed Tax Threshold Raise

Key Points:

• A new reporting change for third-party payment networks like Venmo or PayPal has Americans ready.
• Sens. Joe Manchin of West Virginia and Bill Hagerty of Tennessee will propose increasing the tax reporting threshold for 2022 from $600 to $10,000.
• The possibility of obtaining 1099-Ks for personal transfers has been noted by tax experts as a potential pain point for filers due to the lower tax reporting threshold.

An increase in the tax threshold for third-party payment networks has been proposed by two US senators. From $600 to $10,000 would be the new threshold for services like Venmo, PayPal, and CashApp, according to CNBC.

To raise the Form 1099-K level, Sen. Bill Hagerty, R-Tenn., would submit an amendment to the $1.7 trillion spending plan, according to Sen. Joe Manchin, D-W.Va., the proposal’s principal sponsor.

Many Americans have been watching developments around the IRS Form-1099K with great interest. Independent contractors frequently use the form to report earnings on third-party payment networks. Particularly, if it exceeds a limit imposed by the IRS, revenue from services like PayPal, Venmo, and CashApp must be reported.

Taxpayers received 1099-K with more than 200 transactions totaling more than $20,000 before 2022. Nevertheless, the American Rescue Plan Act of 2021 lowered it to merely $600. Currently, the form may be activated by even a single transaction totaling more than $600.

Manchin believes that delaying the implementation of the new rule is preferable to raising the threshold to $10,000.

The head of AJC Accounting Services in Manalapan, New Jersey, and certified public accountant Albert Campo recently told CNBC:

“As tax preparers, we are more or less expecting the worst. We’re expecting most of our clients to get these things. So we’re trying to be proactive in addressing it.”

Venmo, PayPal, and CashApp are all payment platforms that support digital assets, the tax increase will cause some disadvantages for transaction fee regulations for users if Form 1099-K is approved.

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