If you get paid online in Washington, there are some upcoming changes to expect in how you receive your tax paperwork. It shouldn’t be a cause for alarm for anybody, but there are new rules you’ll probably want to be aware of so they don’t catch you off guard when they come.
Required reporting for income over $600
A new requirement from the IRS would make it mandatory for these online payment companies to report income that exceeds $600. But this alteration to the tax rules has been postponed because the IRS faced various concerns about how long it would take to implement this plan. These services are only required to report income over $20,000.
The online payment services that this change would impact include:
- Cash App
This delay is reportedly an attempt to make the transition smoother and to make sure everything is clear for everyone from the taxpayers to the professionals and the industry at large. That’s what the acting IRS commissioner said in a December press release.
It’s a reporting change, not a tax law change
One thing to remember about the new rule is that it’s a change in tax reporting rather than the tax law itself. The purpose of this rule is to help the IRS keep track of payments made via these third-party services since many of them have gone unreported in the past.
For anyone who freelances or has a side gig and made over $600 and a third-party payment app was used to get your money to you, it’s still a requirement that your tax return reflects that income when you file. The thing to keep in mind is that it’s unlikely that you’ll get a 1099-K for what you earned in 2022.
It’s helpful to know that this change is in the works if you operate in the gig economy or are in any other situation where you get paid through one of these online vendors. And there’s a chance that the reporting change might even be rolled out by the time you have to file your 2023 taxes.