Mon, April 22, 2024

IRS changes reporting requirement for mobile payment apps

Mobile payment apps like CashApp and Venmo have been a boon for some small businesses, but a change in the tax law will increase the need for stricter accounting practices.

In the past, a business could bring in $20,000 through an app without triggering any additional paperwork, but in 2022 the IRS has lowered that threshold to $600. Any amount of business transactions totaling more than $600 will require the app to send a 1099-K income form to the business.

This includes apps that have accounts that hold money, like CashApp, Venmo and PayPal, but not others like Zelle that serve only as a conduit from one financial institution to another.

eoy CAMPAIGN HEADER

The new law affects only business transactions, not personal transfers of money. However, Josue Garcia, a CPA in North Augusta, said it really shouldn’t mean a change in reporting business income.

“At the end of the day, you should be reporting this anyway,” he said.

Whether using a mobile payment app or not, all business transactions should be reported on your taxes. (Photo by Kelly Sikkema on Unsplash)

Businesses that might be affected are those who may not generally think of themselves as a business – selling homemade crafts at a street fair, who have turned a hobby into a small moneymaking venture, self-employed contractors or those who sell items on online auction sites like eBay. Those types of businesses may have been less likely to report cash transactions in the past and have viewed mobile payment apps as a form of cash.

Although the apps have settings to change between personal and business transactions, Garcia said the best way to keep them apart is to open a separate business account, either with the business EIN or personal Social Security number.

The new law is in effect for income earned in 2022, reportable in 2023.

Garcia said it’s a good reminder that businesses, even small, part-time businesses, should keep track of all income and expenses.

“It all comes down to it’s always good to report your income, no matter where it comes from,” Garcia said.

Subscribe to our eNewsletter for the BEST local business news delivered to your Inbox each week day.

* indicates required

Leave a comment

Your email address will not be published. Required fields are marked *

More Posts

Spotlight: Goodwill of Middle GA & the CSRA

Goodwill Administrative Offices 3145 Washington Road Augusta, Georgia www.goodwillworks.org 706-650-5760 For over a century, Goodwill has stood as a beacon of hope, transforming donations into

The I.T. workforce of tomorrow in the CSRA

Savannah River Nuclear Solutions (SRNS) Information Technology (IT) Youth Apprenticeship opportunity is underway after 16 area high school students toured IT facilities at the Savannah

Christmas in April?

Pitching innovation, new Cue, and another Master-ful boost for the CSRA! Mike Petchenik has the scoop in today’s Biz Bits Week in Review. Subscribe to