Calling All Venmo, PayPal, Zelle and Cash App Users: You Need To Watch Out For This Tax Issue

Money Rehab with Nicole Lapin

Money News Network

Education, Self-improvement, Business

4.4 • 1.4K Ratings

🗓️ 21 April 2023

⏱️ 10 minutes

🔗️ Recording | iTunes | RSS

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Summary

Say you throw your card down at brunch with friends and everyone pays you back via Venmo. Because of some changes to how the IRS collects income data from third party payment apps (Venmo, Zelle, etc.,), the IRS may mistakenly count that Venmo payment as income— and we definitely do not want that. Here's the intel on this change, and what to do if this happens to you. Here's your new fav form (be sure you're looking at the right form for the year in question): https://www.irs.gov/instructions/i1040sc

Transcript

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0:00.0	I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand.
0:07.0	It's time for somebody to rehab.
0:15.3	We've all been there.
0:16.3	You go in, get your nails done, get your hair done, get a tattoo, and the artist says,
0:21.0	hey, if you pay me with Venmo, I will try to tax.
0:25.0	And in that moment, you know, they're not nearly plated on fake income taxes on that
0:30.5	money either.
0:32.0	That little, I'm not going to call it a loo pole because it's not actually legal, is
0:37.4	about to end.
0:39.1	And why it's about to end has major implications for anyone with a hobby business or who uses
0:44.9	third-party payment apps like Venmo to split drinks with friends pretty regularly.
0:49.7	The change all comes down to the 1099K4.
0:54.4	Now this is a big deal.
0:55.5	The 1099K form is a federal tax form issued by third-party settlement apps like PayPal,
1:01.3	Venmo, Zell, Cash App, you know, all the biggies.
1:04.6	Throughout this episode, I'm going to just use Venmo as an example, but these changes apply
1:09.2	to all the apps I just mentioned.
1:11.8	This form is meant for those tattoo artists or manicurists, anyone who gets paid for their
1:17.2	work via a payment app and needs to declare that income.
1:21.0	Until last year, these apps only issued a 1099K if you made over $20,000 or had more
1:28.7	than 600 transactions in Venmo or whatever your preferred payment app is.
1:33.9	That'll change with the American Rescue Plan.
	...

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