The IRS wants your CashApp, Venmo, Paypal & Apple Pay?! (2022) - YouTube

all right very important update so  starting january 1st 2022 if you sell  

anything whether it's offline or online and you  are receiving payments totaling more than 600  

through your cash app your vimo your paypal apple  pay or even your zelle account then you're likely  

gonna have to pay some taxes on it because in the  hundreds of pages of the american rescue plan act  

there was a tax provision that lowered the  federal threshold for issuing the 1099 k form  

to 600 which basically means that whether you  are occasionally selling something that you own  

or you're actually operating a business if you  sold more than 600 worth of goods or services  

then the irs wants to see you at tax time so  in this brief episode i'm going to give you  

all the details and let you in on how the  irs will know about any of these payments  

that happen on these third-party apps so be  sure to like this video while the intro plays

hey there and welcome to our channel i'm sean with  life accounting the accounting company that saves  

people from high taxes and low profits okay let's  go ahead and answer a few questions number one  

what did the american rescue plan act change as  it relates to income reporting so currently and  

this is for the 2020 and 2021 tax year the  rule is that if you sell goods or services  

through an app like paypal then you generally will  only receive a tax form the 1099k form if you have  

at least 200 transactions totaling more than 20  thousand dollars which makes it pretty obvious  

that you are actually doing legitimate business at  that rate but as i mentioned earlier things have  

changed and for the 2022 tax year you may  receive a 1099 k form on anything you sell over  

six hundred dollars with no minimum transaction  levels which is a pretty significant change in an  

increase of nineteen thousand and four hundred  dollars which is a big big move right now i  

want to hear from you comment below what you think  about this and while you're at it don't forget to  

like this video if you enjoy updates like this one  now here's my take lately when new laws pass that  

headlines that we see on the news are typically  around stimulus checks tax credits like the child  

tax credits and grants loans etc but the  government is primarily funded by tax dollars  

and when all these new enhanced benefits come into  play then really we are the ones that are paying  

for it and it's moves like this one lowering the  federal thresholds that help the government cover  

all the bills now of course this isn't a political  video but i know the biden administration focused  

on taxing the rich but this is definitely a tax  provision that is targeted at everyone okay so  

question number two does this mean your taxes will  increase well if you get a 1099k form you should  

definitely report it on your taxes but that does  not mean you're going to actually pay more taxes  

on that income remember paying taxes comes down  to your total taxable income so you have to take  

a look at what tax bracket you fall into after  the standard or itemized deductions that you have  

for example if you're single and your only source  of income was a side hustle or some type of side  

business that made let's say 10 000 then you  wouldn't have to pay any taxes on that because  

you don't fall into a tax bracket after you take  the standard deduction and the math on that is  

actually very simple you have ten thousand dollar  income minus a twelve thousand five hundred and  

fifty dollar standard deduction which makes a zero  taxable income all right question number three how  

does the irs know about your cash app or even your  cash transactions so i already sent this update to  

a few people and the first question i got was how  does the irs know what's in my cash up and how do  

they know that it's actually income and it's not  like a donation or a gift that i gave someone  

so i want to let you in on two ways the irs can  find out that what you have is actually income  

of course the first way number one is pretty  obvious right is through that 1099k form that form  

is sent to you and to the irs so they will have  record of any income that you receive through that  

1099k the second way is not so obvious okay so let  me explain your income is someone else's deduction  

right just like your deduction is usually someone  else's income so let's break this down a little  

bit more so for example if you receive a payment  in the form of cash you may be thinking there is  

no way the irs can actually track that but if the  person you paid is trying to reduce their taxable  

income then they will likely and they should write  off the money that they pay you which gives the  

irs something to track right like this person  took a deduction that deduction is your income  

or your income is someone else's deduction so of  course you never want to be investigated for tax  

evasion and end up going to jail over illegal tax  strategies now we have some videos coming up next  

that talks a little bit more about tax evasion  tax avoidance and other things the irs wants to  

take control over so make sure you check out those  videos coming up next and i'll see you over there