TODAY MANY CUSTOMERS ARE PAYING
WITH THIRD PARTY APPS.
THAT MEANS ELECTRONIC RECORD OF
THE TRANSACTIONS.
THE IRS IS NOW KEEPING TRACK.
WHEN WAS THE LAST TIME YOU USED
CASH?
>> NOW IT IS EASY FOR CUSTOMERS
TO VENMO YOUR BUSINESS.
>> MILLIONS OF AMERICANS USE
PAYMENT APPS EVERY DAY
TRANSFERRING MONEY TO FRIENDS
AND FAMILY AT GARAGE SALES,
AIRBNBS, ETSY, EBAY AND SMALL
BUSINESSES.
SUDDENLY THE TAX RULES CHANGED.
THE IRS USED TO REQUIRE BUSINESS
OWNERS TO REPORT PAYMENT APP
INCOME OVER 20,000 AND 200
TRANSACTIONS A ANNUALLY.
NOW THEY MUST REPORT INCOME JUST
OVER $600 A YEAR.
A HAIR STYLIST IN SAN DIEGO, A
LOT OF HER CUSTOMERS PAY WITH
VENMO.
THE NEW RULES COULD COMPLICATE
THINGS.
>> A BIG HEADACHE IS A GOOD WAY
TOO CATEGORIZE IT.
IT JUST MAKES IT ANOTHER THING
THAT I THEN HAVE TO DO.
>> Reporter: A PROFESSIONAL
MUSIC TEACHER IN AKRON, OHIO.
>> IT IS REALLY JUST THE
CONVENIENCE.
EVERYBODY’S GOT ONE OF’EM.
VENMO, PAYPAL, ZELLE.
>> THE IRS WILL SEND 1099 K
FORMS FOR ANYONE WHO EARNS AT
LEAST $600 IN PAYMENT APP INCOME
FOR GOODS AND SERVICES.
MAKING IT VERY TOUGH THE HIGH CASH INCOME.
>> IT IS NOT JUST INCOME TAX.
AND THAT IS A BIG BURN.
>> Reporter: THE IRS IS NOT TAXING PERSONAL TRANSFERS.
PAYPAL AND EVA MENDEZVENMO SAYS
THE NEW IRS RULE IS MEANT FOR
BUSINESS, LARGE AND SMALL.
AND A SMALL BUSINESS CAN BE
REALLY SMALL.
WHERE DO WE DRAW THE LINE?
IF YOU ARE A KID OUT OF HIGH
SCHOOL AND YOU ARE MOWING LAWNS
OVER THE SUMMER AND YOU MAKE
MORE THAN 600 BUCKS, WOULD YOU
HAVE TO HAVE ONE O THESE FORMS?
>> POTENTIALLY, YEAH.
SO KEEP GOOD RECORDS.
YOU KNOW, IN THAT INSTANCE,
THERE IS A GOOD CHANCE YOU MAY
GET A FORM, ESPECIALLY IF YOU
ARE USING PAYPAL OR VENMO.
>> TOM, SO WE CHECKED ABOUT THE
MOWING LAWNS EXAMPLE.
WHAT ABOUT BABY SITTERS.
YOU COULD GET UP TO 600 BUCKS IN
A YEAR PRETTY FAST, ESPECIALLY
IN BIG CITIES, THEY CHARGE A
LOT.
WOULD THE BABY SITTERS THEN BE
HAVING TO PAY TAXES?
WOULD THE PEOPLE HIRING THE BABY
SITTER HAVE TO PLAY AN EMPLOYER
TAX?
>> IN THEORY YES.
YES, IN THEORY THE BABY SITTER T
DOG WALKER THAT KIND OF THICK.
THE TRUTH IS THE IRS IS NOT
INTERESTED IN BABY SITTERS AND
LAWN MOWERS, RIGHT?
BUT IF YOU ARE USING THOSE
PAYMENT UP AS TO BUY SOMETHING,
PAY FOR A SERVICE, PRESS THE
BUTTON THAT SAYS YOU ARE PAYING
FOR GOODS SQU SERVICES, THAT
SIGNALS THIS IS IN FACT A
BUSINESS TRANSACTION AND THE IRS
WOULD BE NOTIFIED.
IF YOU ARE JUST TRANSFERRING
MONEY TO A FRIEND, MAYBE THE
BABY SITTER, YOU CAN MARK IT AS
A PERSONAL TRANSACTION.
IF YOU ARE A SMALL BUSINESS
OWNER OR A FREELANCER WHO USES
THE APPS, EXPERTS SAY YOU HAVE
TO KEEP GOOD RECORDS FOR NEXT
YEAR.
TALKING APRIL 2023 BECAUSE THE
IRS ARE NOW HAVE A RECORD OF
EVERY ONE OF THESE PAYMENT APP
TRANSACTIONS.
>> IF YOU MARK IT GOODS AND
SERVICES, RIGHT?
SEEMS LIKE A GIANT LOOPHOLE IN
KIND OF THE HONOR SYSTEM THERE.
>>’S ALWAYS BEEN THE UNDER THE
TABLE CASH ECONOMY WHERE PEOPLE
DON’T ALWAYS RE -- YOU KNOW,
THEY DON’T ALWAYS REPORT
EVERYTHING.
THE BABY SITTERS IS A GOOD
EXAMPLE.
>> TOM, THANK YOU.
FASCINATING ISN’T IT.
>> I WAS ALWAYS GOING TO SAY.
WE COULD ALWAYS JUST GO BACK TO
CASH.
>> CASH, CASH IS KING.
>> AND YOU SHOULD PAY YOUR