Payment Platforms: Will You Get Taxed?
Have you been freaking out about getting a 1099K in 2022 because you use Venmo, PayPal, Cash App, etc. for personal use? Once the Government came out about now getting taxed if you received over $600 through any payment platforms I had friends and family calling and freaking out. So many people use these platforms to exchange money for personal reasons. If you use these apps for personal exchanges you will still be able to do so and not get taxed. If you decide to sell some household items and receive the income through payment platforms you will not get taxed, but only as long as you are not in business for selling these items on the side.
Any transactions you are a part of, as long as it is strictly for personal use then you will not get taxed. When you are making any personal transaction make sure you choose the family and friends purchase, this is to make sure the platform knows the difference between personal and business use.
The government is trying to find a way to close the tax gap of side hustles. To do so they are making more transactions reportable to the IRS. If you are self-employed and using any of these apps to receive income, then yes you will receive a 1099K from that app. The Goods and Services option will need to be used for these transactions.
In the past a business had to make over about $20,000 to receive a 1099K from any payment platform. For the businesses/side hustles that use any of these apps the $600 rule will go into effect after January 1st, 2022. If you have an Etsy business, Airbnb, at home business, hairdresser, etc. this rule will apply to you.
The Washington Post has a very in depth article referring to this topic. I have put the website URL below.
By: G.G. Burkhalter, Tax Senior at CROFT & FROST