This year, Venmo and PayPal users will be affected by a controversial tax law reform. A recent IRS rule would tax payments above $600 from third-party apps and online markets in 2024.
Controversial tax law reform on third-party apps and online markets will be affected (Photo from The Mercury News)
Controversial Tax Law Impact Venmo and PayPal Users Understanding the $600 Threshold
Third-party apps like Venmo, PayPal, Cash App, Airbnb, and Etsy must meet this new criteria. The regulation on the controversial tax law reform does not apply to casual family and friend transactions like splitting dinner bills, gifting, or sharing expenditures.
Since the IRS has deferred fines again, customers have a grace period for the current tax season. Thus, consumers won’t be taxed on the new $600 level until 2024.
The IRS reiterated that individuals need not file Form 1099-K unless their transactions exceed $20,000 with over 200 in 2023. Venmo and PayPal must file Form 1099-K to the IRS and users if their annual transactions surpass $600 starting in January 2025.
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Venmo and PayPal Users Get Short Breather on the New Controversial Tax Law
This short reprieve on the controversial tax law reform gives users time to adjust to new needs. Taxpayers must be educated and plan for changes to comply with the changing tax landscape.
Understanding the ramifications and staying current is crucial as we navigate this new tax landscape. Watch your digital transactions and prepare for future tax adjustments for Venmo and PayPal customers.
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