Have you sold a good or service and received payment via Venmo, Cash App or a similar third-party processor?

Reporting income, whether personal or from your business, has always been considered a taxable event with the IRS. However, effective January 1, 2022, under the American Rescue Plan Act of 2021, third-party processors will be providing you with a Form 1099-K if you generate more than $600 of annual gross sales from the sale of a good or service. Previously the reporting threshold was $20,000 and more than 200 transactions. This threshold lowering will have a significant reporting impact on payment processors.  

If you have historically been below the $20,000/200 transaction thresholds, you can expect additional information requests from your payment processor. Now is the time to ensure your record keeping is complete and accurate, especially for costs associated with revenues related to delivered goods or services paid to you via a third-party processor. It will be important to thoroughly review these sales to ensure they match the payment processors’ reporting.