IRS postpones the reporting thresholds for third-party settlement groups for the tax filing season.
IRS postpones the reporting thresholds for third-party settlement groups for the tax filing season. (Photo: Marca)
Third-Party Settlement Applications Used to Pay Taxes
Venmo, PayPal, and CashApp are the most famous third-party settlement organizations. These TPSOs will not be required to report transactions for the tax year 2022 on Form 1099-K to the IRS and the payee for the lower $600 threshold amount. This has been a part of the implementation of the American Rescue Plan of 2021 which resulted in the delay.
This will make the current 1099-K reporting threshold of $20,000 in payments from more than 200 transactions the basis for the tax year 2022. These payment apps are subject to myths and false information about the IRS and what you’re required to pay taxes on.
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IRS postpones the reporting thresholds for third-party settlement groups for the tax filing season. (Photo: Marca)
The Most Common Myths About TPSOs
Are there taxes for the money sent via payment apps? That is just one question that people usually have. Taxpayers only need to pay taxes on the money you earned from purchasing products and services. There will be only income taxes if you use the payment app to collect payments for the goods and services you sell.
How about financial gifts sent by my friends? The answer to this is still no. According to a published post by Marca, using app payments to send gifts won’t require taxes. There is no need to file a 1099-K if you received money as a gift via a payment app.
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