Payment Platforms Required To Report Transactions To IRS

As of January 1, payment platforms like Venmo, PayPal, and Zelle must report transactions of $600 or more to the IRS, down from the previous $20,000 threshold. This change aims to increase tax compliance, especially among gig economy workers. The new reporting requirement is part of the American Rescue Act, expected to raise $8 billion in additional tax receipts over 10 years. The popularity of payment apps has surged, with Venmo handling over $58 billion in a single quarter. However, not all transactions are taxable, such as personal gifts or shared expenses. Users are advised to correctly categorize transactions to avoid legal issues.

What is the new IRS reporting threshold for payment platforms like Venmo?

• $10,000

• $1,000

• $600

• $20,000

Why did Congress pass the new reporting provision for payment platforms?

• To encourage more people to use cash transactions

• To decrease the workload of the IRS

• To help fund the American Rescue Act

• To increase the popularity of payment apps

How much additional tax revenue does Congress expect to raise with the new reporting provision?

• $10 billion

• $8 billion

• $12 billion

• $5 billion

What advice does Venmo give to users regarding transaction types?

• Avoid using the app for business transactions

• Select 'goods and services' for purchases

• Select 'peer-to-peer' for all transactions

• Use personal accounts for business transactions

What is illegal when trying to avoid taxes on payment platforms?

• Using multiple accounts

• Switching business accounts to personal accounts

• Making transactions over $10,000

• Using cash instead of digital payments