The idea that any payment received over $600 will be automatically taxed as income is false, he explains.
"There's a little bit of confusion over this Venmo rule," says Steven Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute. More from Grow: I made $30,000 at my first job and now earn over $200K a year 'A cool destination to start over': Millennials are flocking to Portugal Suze Orman: 3 investing mistakes that can make you a 'financial fool'
It applies to your 2022 taxes, which you'll file in the spring of 2023. The new reporting requirement only applies to sellers of goods and services, not personal payments, like if someone paid you back for dinner.Īnd it doesn't apply to the taxes you're filing this year. Those posts refer to a provision in the American Rescue Plan Act, which went into effect on January 1, 2022, according to which anyone receiving $600 per year using Venmo, PayPal, Zelle, or Cash App will receive a 1099-K and be required to report that income on their taxes.
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