WEST SPRINGFIELD, Mass. (WWLP) – With tax season approaching, you may have heard about a change when it comes to your Venmo or PayPal transactions. The IRS is backing off the change made in the American Rescue Plan and that can give you time to be ready for next tax season.
The change you will have to be prepared for next tax season focuses on the 1099-K. If you receive a transaction that is 600 dollars or more through apps such as Venmo, Cash App, or PayPal, it will need to be reported on that tax form. That is regardless of the number of transactions.
22News spoke with Ray Maagero who is an expert with Liberty Tax in West Springfield.
He used the example of a garage sale to explain how important it will be to specify which transactions are personal, as opposed to business.
Maagerno advised, “You want to keep track of the items that you sold that were not business income so that if the IRS ever audits you, then you have records that say ‘hey this was just a garage sale. I sold a few things in my basement, some people picked it up, I didn’t make any money on it.’ as opposed to having a business”.
However you should watch out for a 1099-K this year, some companies that may have been ahead of the curve and you might soon receive one. Maagero recommends consulting a tax expert to make sure you will be prepared for this tax season as well as next.