Money Matters- New IRS rules for payment apps
COLUMBIA, S.C. (WIS) - The IRS has new rules for apps like Venmo, Paypal and Cash App. Josh Bradley from Capital City Financial explains those new rules.
The government is always trying to find ways to bridge its spending problems and they are aware that some of the payments on those apps are done to avoid taxes, which is why they’ve rolled out this rule.
However, there are some misconceptions about these new rules. For example, a lot of people think that any transaction over $600 is taxable, which is not necessarily true, they are reported to the government. For individuals, most of these will not be taxable like payments to family and friends.
The key is to make sure you keep a record of the payments so that you can verify what the payments were made for.
For small businesses, the bar gets a little higher.
Any kind of business that accept payments for services or goods through one of these apps, they have to report because it was for income or costs. However, those businesses are allowed to take deductions on their expenses. Bradley says keeping a good record is still beneficial in those situations as well and let your tax person know about those expenses.
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