{"id":22045,"date":"2021-10-21T09:54:52","date_gmt":"2021-10-21T14:54:52","guid":{"rendered":"https:\/\/wealtheo.com\/?p=22045"},"modified":"2021-12-17T09:28:39","modified_gmt":"2021-12-17T15:28:39","slug":"potential-changes-in-2022-irs-reporting-requirements","status":"publish","type":"post","link":"https:\/\/wealtheo.com\/articles\/principles\/potential-changes-in-2022-irs-reporting-requirements\/","title":{"rendered":"Potential Changes in 2022: IRS Reporting Requirements"},"content":{"rendered":"\n

In a year, IRS reporting requirements will change drastically. The IRS has been trying for years to make it easier for taxpayers and tax professionals to comply with federal income tax law by providing more timely and valuable information about the tax system. Beginning on January 1, 2022, cash app business transactions totaling more than $600 will be required to report to the Internal Revenue Service.<\/p>\n\n\n\n

This blog post will explore these new IRS rules and how they may affect your business.<\/p>\n\n\n\n

<\/a>Why Does This Change Matters?<\/h2>\n\n\n\n

In a world filled with easy-to-use payment apps, taxpayers and tax professionals alike are in a frenzy trying to understand the IRS’ new reporting requirements.<\/p>\n\n\n\n

ABC Action News<\/a> states the new IRS rule will require cash app users to report any business transactions over $600, but before this happened, they were only required if the amount was greater than $20K. This includes things like Venmo, Zelle, and PayPal.<\/p>\n\n\n\n

The change affects how transactions are reported, but it does not affect what is taxable or deductible. WDSU News<\/a> reported that you should still maintain accurate records \u2014 especially if you are a business owner. In this manner, if you are audited, you will be able to prove whether the money is taxable or not. Additionally, having a separate cash app platform for your business is a good idea.<\/p>\n\n\n\n

<\/a>Who Is Impacted by This Change in Reporting Requirements?<\/h2>\n\n\n\n

Business owners, independent contractors, self-employed workers, or part-time workers that accept payments using any of the cash apps would be the most adversely affected by the change. Current law mandates that tax forms be sent to users “if their gross income [from payments made through the app] is $20,000 or more, and if they make 200 distinct transactions within a calendar year,” according to WDSU 6.<\/p>\n\n\n\n

On the other hand, personal transactions will not be affected. However, when self-employed individuals use the same cash app for personal and business transactions, confusion can arise. If you use cash apps for your business, be sure to keep good records of all taxable and non-taxable transactions.<\/p>\n\n\n\n

Setting up a separate account for these business tax transactions will help avoid any confusion with taxes when filing the Form 1099-K at tax time later this year or next spring, depending on where you live.<\/p>\n\n\n\n

<\/a>How Will These Changes Affect Taxpayers?<\/h2>\n\n\n\n

This new IRS requirement matters especially if you are a taxpayer or business owner, as this new rule will affect you or your business in several ways:<\/p>\n\n\n\n