IRS REMINDER ABOUT THE NEW 1099 TAX RULES
December 3, 2022 - Douglas Myser
IRS reminder about the new 1099 tax rules. With increasing budget deficits, and additional spending due to the Covid outbreak, Congress and the Biden Administration have been looking for additional sources of revenue. That is why with the passage of the Inflation Reduction Act, nearly 87,000 new IRS employees are being added, so the rich who have been parking money offshore, and those with tax debts, and blatant tax cheats, can be held to account for what they owe. A Tax Resolution Company can help you out if you have a tax debt, or unfiled tax returns. In addition to that, the IRS is clamping down on those who earn cash payments thru methods not previously reporting to the IRS. Those businesses accepting payments through payment cards, or third party networks, will now receive a 1099-K for any income over $600, which must be reported. IRS reminder about the new 1099 tax rules.
There are not changes to the fact that earning income is taxable, just that the income must be reported on form 1099-K. Those forms will be sent to the IRS to validate the income those earning that way receive. The old rule was that unless you earned over $20,000, and 200 transactions, the form was not sent out, and it provided a way for those workers to underreport income. If you are unsure of these rules, our Tax Resolution makes it easy to understand. It makes no difference if the number of transactions is only one, if the amount is over $600, it will cause a notice from that entity paying the money to send out a notice. That means any transaction by credit card, debit card, banks, PayPal, Uber, Lyft, and any other third party vendor.
It is also important to keep personal and business transactions separate, in the accounts you use. Payments through third party vendors like Venmo or PayPal from friends and relatives as personal gifts or reimbursement for personal expenses is not taxable and should not be included.