The Internal Revenue Service (IRS) wants to know who is using these apps and how much they're sending or receiving. The previous threshold for these apps was $20,000. Starting next year, the IRS wants to know about everything over $600.
Who will they be looking at and why the change? It's part of the Biden American Rescue Plan.
Chris Hobart with Hobart Wealth Management says this is a move to close the gap between the $20,000 and $600. Basically, Uncle Sam wants his cut of taxable income.
So how will the IRS distinguish between business and personal transactions? People in households often split rent, mortgages and utilities. To make things simple, they pay each other, and those apps are easy ways to shift the money around quickly.
"That's not going to be taxable," Hobart said. "It's just on goods sold or services provided."
WCNC Charlotte is always asking "where's the money?" If you need help, reach out to the Defenders team by emailing firstname.lastname@example.org.
The app will notify the IRS for business transactions and generate a 1099K form. Financial experts recommend using one app for business and one for personal, that way things will be separate and easier to control, thus diminishing your likelihood of some sort of audit, which they say is low.
If you have any further questions, the IRS' website will lay out the timeline, as well as expectations and rules for cash app users.
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