The threshold for Cash app payments drastically lowered starting Jan 1, 2022.
Currently, the IRS has rules for cash app payments. You have to report payments of $20,000 and more and/or 200 transactions. This will all change on January 1, 2022.
The IRS has lowered the threshold to a total of $600 in payments with no minimum transactions. This includes all cash apps like CashApp, Paypal, Venmo, Zelle, Payoneer, and others. This means that you will have to pay taxes on anything that you make over $599.99 in cash app payments. President Biden signed the law with the threshold amendment in March.
The reporting using third-party applications only applies to goods and services, not personal payments. If you make $600 or more you will receive a 1099K form.
Does it apply to things like paying your rent or splitting a restaurant bill? The answer is no. But it does mean that you need to keep track of your paperwork. Many people are under the impression that you will have to pay additional taxes for Cash App payments? The answer is yes and no, as long as you are already paying taxes on the money that you make with Cash Apps you will not be paying additional taxes but if you are not making payments, then yes you will be paying and claiming the income when you get the 1099K form at the end of the year.
While you will not be required to pay any extra taxes as long as you are already claiming the money on your taxes it’s advisable that you will have to keep records of your payments. You can see more information on form 1099K on the IRS website.
The Biden administration and the IRS see this as a way for more honest tax reporting. Thus the reason for drastically lowering the requirement to claim from $20,000 to $600.