$600 tax/Venmo/PayPal

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rcs9250

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Jan 20, 2019
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In the news.

www.foxbusiness.com

IRS delays tax-reporting rule on Venmo, PayPal payments over $600

A controversial new tax-reporting policy involving payments over $600 on e-commerce platforms like eBay and Etsy will be delayed by one year, the IRS said.
www.foxbusiness.com www.foxbusiness.com

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https://www.foxbusiness.com/money/irs-delays-tax-reporting-rule-venmo-paypal-payments-600

Instead, the IRS will treat 2023 as "an additional transition year," meaning that payment apps will not be required to send users Form 1099-K unless their gross income exceeded $20,000 or they had 200 separate transactions within a calendar year. Beginning in 2024, that basic reporting threshold will be increased from $600 to $5,000.
...

The rule only applies to payments received for goods and services transactions, meaning that using Venmo or PayPal to send a loved one a gift, pay your roommate rent or reimburse a friend for dinner will be excluded. Also excluded is anyone who receives money from selling a personal item at a loss; for example, if you purchased a couch for $300 and sold it for $250, the amount is not taxable.

Obviously, selling something at a loss means you have to be able to document what you paid for it.
 
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ctshooter said:
This rule is for $600 per purchase. There has a been a long standing rule for something like 100 transactions and/or $20k will gen a 1099.
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This is not correct. Windonyergrape has it correct. This is the second year (since inception) that they have delayed it "until next year". It's been very detrimental to ebay, PayPal and many others. Face to face, and cash deals are much more popular now. It's also the reason many online sellers now require a Postal money order.

I keep thinking they will repeal it, or at least come up with a reasonable number, somewhere between $600, and the 20k it was previously, that ctshooter stated.
 
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Also paypal friends and family isn't taxable....

17,000

If you receive a gift, you do not need to report it on your taxes. According to the IRS, a gift occurs when you give property (like money) without expecting anything in return. If you gift someone more than the annual gift tax exclusion amount ($17,000 in 2022), the giver must file Form 709 (a gift tax return).
 
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No political speak per the forum rules.

It doesn't matter what is and what isnt, to them. This is how it will work:

IRS sees money. IRS sends you a tax bill.

You either prove it or you dont.

My old couch, friends, it all doesn't matter if you cant prove it. There are going to be alot of people getting a real wake up call.

Even IF you have proof for all your friends or couch payments....there is an old saying that goes "The punishment is the process"

Quick story: Few years back my tax lady failed to report all my state specific sales tax on my sales. IRS says OH you must have made ALL those sales in your state then! They send me a $31, 000 tax bill. Of course I did have proof and it went down to a hilarious $74 (Seventy Four)

So much to say, its not up to them to prove anything....its up to you. Its real easy for them to just send you the bill.
Whether you click friends and family, garage sale whatever all does not matter... if you cannot prove it.
 
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HogKiller said:
Put a sign on your door, "Door is open, don't kick it in" Don't want to inconvenience the IRS and a repair bill.
Click to expand...

I reported every last penny luckily eBay has good resources on their website for your net sales, ebay fees, shipping costs, ect...and I had a spreadsheet of my cost of goods plus receipts, although these days, when using websites to track your data, you're lucky if they go back 5+ years and the IRS could always come knocking around that time where I'd be scrambling!

-Matt
 
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WIndOnYerGrape said:
No political speak per the forum rules.

It doesn't matter what is and what isnt, to them. This is how it will work:

IRS sees money. IRS sends you a tax bill.

You either prove it or you dont.

My old couch, friends, it all doesn't matter if you cant prove it. There are going to be alot of people getting a real wake up call.

Even IF you have proof for all your friends or couch payments....there is an old saying that goes "The punishment is the process"

Quick story: Few years back my tax lady failed to report all my state specific sales tax on my sales. IRS says OH you must have made ALL those sales in your state then! They send me a $31, 000 tax bill. Of course I did have proof and it went down to a hilarious $74 (Seventy Four)

So much to say, its not up to them to prove anything....its up to you. Its real easy for them to just send you the bill.
Whether you click friends and family, garage sale whatever all does not matter if you cannot prove it.
Click to expand...

Friends and family isn't taxable, first off paypal does not even report it to the IRS. Secondly, if a friend hands you a suitcase for 15k and says happy birthday, you don't have to report that either, unless it puts you over the 17k annual limit (of 2022) for gifted 'monies'.

-Matt
 
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Ok friends and family isnt taxable. That means when they send you a tax bill, you have to prove that.

Alot of people are going to think they can skirt the system by taking goods payments via FF payment.

Just because you clicked that button doesn't mean there is some magical thing that keeps the IRS out of it.

Its not political speak to say that they just hired 87,000 IRS agents.

They didn't hire them to twiddle thumbs all day.

All US payment processors, including PayPal, are required to provide information to the US Internal Revenue Service (IRS) about customers who receive payments for the sale of goods and services above the reporting threshold in a calendar year.
 
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