Venmo, Paypal and Zelle must report $600+ transactions to IRS

[MULTIZ321]

Venmo, Paypal and Zelle must report $600+ transactions to IRS

Venmo, PayPal and Zelle must report $600+ in transactions to IRS

Starting Jan. 1, mobile money apps like Venmo, PayPal and Cash App must report annual commercial transactions of $600 or more to the Internal Revenue Service.

www.nbcnews.com

Richard

 

[joestein]

No different than a business than needs to file 1099s at the end of the year. I would assume if your business is a corporation - they don't need to file.

 

[Sandy VDH]

How do you know which transactions are commercial? That is the rub.

 

[joestein]

How do you know which transactions are commercial? That is the rub.

Usually that is any payments to an individual which exceed that amount.

 

[PigsDad]

An example: two people share an apartment with a rent of $1500/month. One person pays the rent and the roommate Venmo's $750 to the other each month.

Question: So if all of those $750 payments are reported to the IRS, what (if anything) does the recipient need to do at tax time? How does Venmo know those aren't "commercial" transfers? Those transfers are not taxable nor should they have any bearing on a person's tax return. My daughter may be in this situation this year since she pays the rent and utilities for the condo she shares w/ three roommates.

Kurt

 

[Ken555]

An example: two people share an apartment with a rent of $1500/month. One person pays the rent and the roommate Venmo's $750 to the other each month.

Question: So if all of those $750 payments are reported to the IRS, what (if anything) does the recipient need to do at tax time? How does Venmo know those aren't "commercial" transfers? Those transfers are not taxable nor should they have any bearing on a person's tax return. My daughter may be in this situation this year since she pays the rent and utilities for the condo she shares w/ three roommates.

Kurt

How is this any different than depositing checks from the roommates…she would still need to account for the money in her tax return. As long as she does that, I don’t see an undue burden here. It seems this new requirement is to make it more difficult to avoid reporting requirements.

FWIW, long ago I was in her position and I collected rent from my roommates and paid it. I still tracked it and identified the deposits for what they were..and it was not considered income on my tax return.


Sent from my iPad using Tapatalk

 

[tschwa2]

I guess you can always ask the person reimbursing you to split the payment into 2 or more smaller payments so they are each under $600. Reporting doesn't mean that you automatically have to pay taxes on it. You have to report if you are carrying over $10,000 in currency when you travel into or out of the US. It's an additional record that the government has which it can use if it thinks it is worth it and appropriate to further investigate. If someone is laundering money through electronic payments it will make it easier to track. If they question you about the rent reimbursement you have a very reasonable explanation. If you have multiple persons sending you several hundred or thousands of dollars almost daily, you likely wouldn't have a reasonable explanation.

 

[Sandy VDH]

It is a pass through expense NOT income but if you get a 1099 for every transaction source over $600 you are adding a lot of burdensome paperwork to catch a few people who are hiding income.

I organize group weekend trips away, and I pay for the rooms, limo rental, wine tasting etc. I get reimbursed by everyone. I am not making profit on it, I am just coordinating the weekends away for our group of friends.

Annoying if you get a 1099 for every individual who sends you more than $600.

I will do what I have to, but it is NOT income. It is reimbursement.

 

[PigsDad]

How is this any different than depositing checks from the roommates…she would still need to account for the money in her tax return.

Huh?!? Since when have we ever needed to account for every deposit in our checking account when doing our taxes? No 1099-K would be created if checks were deposited, but according to the article, a 1099-K could be created if they used Venmo instead. This is a big change.

FWIW, long ago I was in her position and I collected rent from my roommates and paid it. I still tracked it and identified the deposits for what they were..and it was not considered income on my tax return.

Of course it is not income, but the difference is that a 1099-K was not created and reported to the IRS in your case and you never had to "justify" those deposits when you filed your taxes to prove it was not income. In fact, you didn't need to do anything -- you just simply ignored those deposits for your taxes. Today, if you would have used Venmo you now have to "justify" those deposits by providing some sort of proof that those were not taxable income.

Basically, it has switched from "presumed innocent until proven guilty", to "you're guilty; now prove to me you're not". You may think this is not a big deal, but I see it as another big brother move from our government.

Kurt

 

[kanerf]

So, I will pay in three increments of $599.

 

[Ken555]

Huh?!? Since when have we ever needed to account for every deposit in our checking account when doing our taxes? No 1099-K would be created if checks were deposited, but according to the article, a 1099-K could be created if they used Venmo instead. This is a big change.


Of course it is not income, but the difference is that a 1099-K was not created and reported to the IRS in your case and you never had to "justify" those deposits when you filed your taxes to prove it was not income. In fact, you didn't need to do anything -- you just simply ignored those deposits for your taxes. Today, if you would have used Venmo you now have to "justify" those deposits by providing some sort of proof that those were not taxable income.

Basically, it has switched from "presumed innocent until proven guilty", to "you're guilty; now prove to me you're not". You may think this is not a big deal, but I see it as another big brother move from our government.

Kurt

All I meant was that I track all income... and always have. It didn't matter to me in the past when I received 1099s (and still do) since I track it. As long as that's done, I agree it could be a bit more work at times but it shouldn't be too much of an inconvenience. My accountant always tracked those reimbursement payments for me way back when, and I can't imagine it's any different today.

 

[Brett]

Huh?!? Since when have we ever needed to account for every deposit in our checking account when doing our taxes? No 1099-K would be created if checks were deposited, but according to the article, a 1099-K could be created if they used Venmo instead. This is a big change.


Of course it is not income, but the difference is that a 1099-K was not created and reported to the IRS in your case and you never had to "justify" those deposits when you filed your taxes to prove it was not income. In fact, you didn't need to do anything -- you just simply ignored those deposits for your taxes. Today, if you would have used Venmo you now have to "justify" those deposits by providing some sort of proof that those were not taxable income.

Basically, it has switched from "presumed innocent until proven guilty", to "you're guilty; now prove to me you're not". You may think this is not a big deal, but I see it as another big brother move from our government.

Kurt

it only applies to commercial, business and corporate transactions - (which always had the $600 threshold)


'The tax-reporting change only applies to charges for commercial goods or services, not personal charges to friends and family, like splitting a dinner bill."

transfers to /from personal checking or personal savings accounts don't get reported

 

[PigsDad]

it only applies to commercial, business and corporate transactions (which always had the $600 threshold)

I don't think transfers to /from personal checking or savings accounts get reported

Yes, it mentioned that in the article, but how does PayPal, Venmo, etc. determine that? Hopefully, this is a non-issue.

Kurt

 

[Brett]

Yes, it mentioned that in the article, but how does PayPal, Venmo, etc. determine that? Hopefully, this is a non-issue.

Kurt

I think it's a "non-issue" for personal checking or savings accounts, - bank business checking or corporate accounts are marked commercial and Zelle or Venmo would see the business/ commercial category

 

[joestein]

Also.. it is $600 PER YEAR. So, they report the total each year, not on each transaction greater than $600.

So, if you have 100 transactions of $100 each - they will report $10,000 to the IRS.

 

[Ken555]

I think it's a "non-issue" for personal checking or savings accounts, - bank business checking or corporate accounts are marked commercial and Zelle or Venmo would see the business/ commercial category

This is what I would expect would occur. Still, always good to have proper accounting of all deposits.

 

[The Colorado Kid]

Huh?!? Since when have we ever needed to account for every deposit in our checking account when doing our taxes? No 1099-K would be created if checks were deposited, but according to the article, a 1099-K could be created if they used Venmo instead. This is a big change.


Of course it is not income, but the difference is that a 1099-K was not created and reported to the IRS in your case and you never had to "justify" those deposits when you filed your taxes to prove it was not income. In fact, you didn't need to do anything -- you just simply ignored those deposits for your taxes. Today, if you would have used Venmo you now have to "justify" those deposits by providing some sort of proof that those were not taxable income.

Basically, it has switched from "presumed innocent until proven guilty", to "you're guilty; now prove to me you're not". You may think this is not a big deal, but I see it as another big brother move from our government.

Kurt

It's is a really big deal ugh!

 

[Brett]

It's is a really big deal ugh!

Probably not a "big deal" unless you are a business or corporation that doesn't use credit cards but accepts Venmo payments .... big ugh !

 

[jules54]

[MERGED]

Not sure if this is the right board to post this on. Wanted to get it out there so the Tug family could start planning.

Venmo and PayPal starting Jan.2022 have to report any payments received over 600.00 this sounds like an annual amount not a by payment amount. I use both these payment services for almost all my timeshare rentals. I assume this is going to cover payment through friends also.

Ebay sent me a notice on the same issue. Need to add my social security number to account before I can receive payouts. Same reason income reporting to IRS anything over 600.00 annually.

For me this means a raise in rental prices. Previous renters I will take checks from. Now EBay no work around there.
I was going to send a big PayPal payment to another Wyndham owner for some reservations I bought from him today. I read about this and told him about it now I’m sending him a check.

 

[klpca]

Not sure if this is the right board to post this on. Wanted to get it out there so the Tug family could start planning.

Venmo and PayPal starting Jan.2022 have to report any payments received over 600.00 this sounds like an annual amount not a by payment amount. I use both these payment services for almost all my timeshare rentals. I assume this is going to cover payment through friends also.

Ebay sent me a notice on the same issue. Need to add my social security number to account before I can receive payouts. Same reason income reporting to IRS anything over 600.00 annually.

For me this means a raise in rental prices. Previous renters I will take checks from. Now EBay no work around there.
I was going to send a big PayPal payment to another Wyndham owner for some reservations I bought from him today. I read about this and told him about it now I’m sending him a check.

FYI the income is required to be reported anyway. Under audit they will just look at deposits. That said I'm not ratting out anyone. Just don't get too complacent.

Btw, I received the same thing from Ticketmaster. We have season tickets for basketball and usually sell some of them if we can't go. It will never be $600 though and we rarely sell them for more than face value so there won't be anything to report. I'm more upset about giving yet another company a social security number!

 

[Ty1on]

What I read is that they must report when AGGREGATE transactions from a single party are at or over $600. This means 12 $50 transfers in a calendar year would be reported. So much for "we'll raise the money by taxing the rich"

 

[Tia]

We were going to put in $100 using cash to a relatives bank account, couldn't do it. They wanted a check written instead, do not understand the reason! I don't care to do online banking.

 

[Brett]

We were going to put in $100 using cash to a relatives bank account, couldn't do it. They wanted a check written instead, do not understand the reason! I don't care to do online banking.

I use Zelle online banking every week ... no problemo

 

[klpca]

How do you know which transactions are commercial? That is the rub.

Venmo, PayPal and Zelle must report $600+ in transactions to IRS

Starting Jan. 1, mobile money apps like Venmo, PayPal and Cash App must report annual commercial transactions of $600 or more to the Internal Revenue Service.

www.nbcnews.com

At some point they will be asking someone (payer, recipient) to tell them what kind of transaction it is for.
PayPal said both "PayPal and Venmo offer a way for customers to tag their peer-to-peer (P2P) transactions as either personal/friends and family or goods and services by choosing the appropriate category for each transaction."

 

[Brett]

At some point they will be asking someone (payer, recipient) to tell them what kind of transaction it is for.
PayPal said both "PayPal and Venmo offer a way for customers to tag their peer-to-peer (P2P) transactions as either personal/friends and family or goods and services by choosing the appropriate category for each transaction."

at some point ... instantly ... "they" .. the "computers" will recognize commercial business transactions

(like they already do now )