New 1099-K Reporting

During the Biden Administration, a new law was passed that required mobile-payment processing apps such as Zelle, Cash App, PayPal, Venmo, Square etc. to disclose transactions from individuals receiving more than $600 each year for services provided or goods sold.

Who Will Be Affected?

It is safe to assume that individuals receiving payments for good or services in excess of $600 will be receiving a 1099-K. Under the old law, these mobile-payment processing companies would disclose earnings of $20,000 and more, and more than 200 transactions per year. In an attempt to encourage taxpayers to report these earnings, a new law was enacted January 1st, 2022, requiring these processing apps to issue 1099-Ks for good or services.

This will include independent contractors, gig workers and other taxpayers earning taxable income from a variety of services. There are individuals who will be excluded from this reporting requirement such as taxpayers receiving funds for personal events, but it is quite possible that a 1099-K might still be issued mistakenly.

Tip:

Keep meticulous records if you receive a 1099-K for taxable transactions. Work with a tax professional to help mitigate some of the taxes owed. Likewise, if you receive a 1099-K for a personal transaction, please feel free to contact us so we can better assist you.