In December, the Internal Revenue Service announced a delay of one year in reporting the new $600 IRS tax law. This tax law requires online sellers and gig workers who have received over $600 annually on payment platforms like Cash App, Venmo, or PayPal to report the income using a 1099-K tax form. Previously, these payment service users only had to report income to the IRS if they had over 200 transactions, totaling more than $20,000 in revenue.

Below outlines how this delay may impact you. Please note, the Frequently Asked Questions and subsequent responses below are for informational purposes only. We strongly advise you to consult with a tax or legal professional.

What does this delay mean?

Third-party payment services like Cash App, Venmo, or PayPal and individuals are not required to report transactions meeting the $600 threshold on a Form 1099-K.

This delay will allow the 2022 tax year to serve as a transitional year for this new rule. The existing threshold of $20,000 remains in place.

What if I already received the 1099-K form?

For individuals who may have already received a 1099-K, the IRS is working rapidly to provide instructions and clarity. Additional details on the delay will be available in the near future, along with additional information to help taxpayers and the industry. We recommend visiting IRS.gov for all of the latest guidance.

What if my transactions exceed the 1099-K reporting threshold?

The IRS stated that the existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions would remain in effect. For more information about filling out this form, please visit IRS.gov.

Will this delay affect individuals who use apps like PayPal or Venmo for personal reasons?

The law does not affect individuals who use these apps for reimbursement purposes, personal gifts, or charitable donations. The IRS is not taxing transactions between family and friends, such as splitting the cost of a ride-share service, meal, or household bill. For more information, please refer to the IRS FAQ site.

Are Zelle® transactions subject to tax reporting?

FirstBank’s digital payment service, Zelle®, works differently than Venmo and PayPal, and according to Zelle® it does not report any transactions made on the Zelle Network® to the IRS, even if the total is more than $600 for both businesses and personal. The law requiring certain payment networks to provide forms 1099K for information reporting does not apply to the Zelle Network®.

For more information about this, please visit Zelle®.

For Zelle® users, the new law doesn’t apply. More info. can be found here on What the New $600 IRS Tax Law Means for Zelle Users.

What does this mean for the 2023 tax year?

Beginning January 1, 2023, third-party payment services and taxpayers meeting the $600 threshold, regardless of the number of transactions, are required to file a 1099-K for the 2023 tax year.

Please discuss any questions or concerns with your tax advisor or accountant.

Where can I go for more information?

For more information, you can refer to the IRS FAQ site.

FirstBank does not provide tax advice; please discuss any questions or concerns with your tax advisor or accountant. You may refer to the IRS FAQ site for more information.

Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.

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