The Internal Revenue Service (IRS) announced on Tuesday that they will delay applying new reporting obligations that were meant to start for the approaching tax filing season. This will give individuals who use Venmo, Cash App, and other payment apps a tax break this year.
The American Rescue Plan approved in March of 2021 necessitates that app users who gain over $600 from the sale of products and services must declare these transactions to the IRS, a new regulation.
Taxpayers who have earned more than $20,000 and made more than 200 transactions from selling goods or services will acquire 1099-K documents, which are tax forms that are transmitted by means of payment applications and online marketplaces.
The IRS has declared that the fundamental reporting boundary for 2024 will be amplified from $600 to $5,000.
IRS representatives have stated that a contributing factor to the postponement is the perplexity of taxpayers on what kinds of exchanges must be reported.
As an example, engaging in one-on-one exchanges such as selling furniture or a vehicle, remitting rent to a housemate, and acquiring tickets to a concert would not be classified as reportable transactions, however other purchases would be considered as such.
Danny Werfel, Commissioner of the Internal Revenue Service (IRS), declared that using a stepwise process is the correct action for the purpose of tax management. He added that an extension for the 2023 tax year will be useful to avoid any confusion for taxpayers, tax experts, and other related parties.
The implementation of this demand was postponed last year too.
Werfel commented that after many months of gathering input from external organizations and others, it was evident that they needed more time to put the new reporting regulations into effect.
The American Rescue Plan that was passed in March 2021 included a provision which mandates the reporting of transactions in payment apps such as Venmo, Cash App, and more for any goods and services which are worth $600 or more in a given year. Until the passing of the ARP, and for this year, this reporting requirement was limited to those taxpayers who got more than $20,000 and had over 200 transactions.