The IRS has confirmed new rules for users of third-party payment apps like PayPal, Venmo, Cash App, and Zelle.
Starting in 2024, if you earn over $5,000 in untaxed income through these platforms, youโll need to file a 1099-K form. This threshold will drop to $2,500 in 2025 and $600 by 2026.
These changes stem from the Inflation Reduction Act and aim to close the gap in reporting unreported income. Historically, the threshold for issuing a 1099-K was $20,000 in earnings across 200 transactions.
However, under the new rules, apps must issue 1099-K forms for income over $600 from freelance or self-employment work.
The IRS is adjusting its reporting system, recognizing that distinguishing between personal and business transactions is complex on these platforms.
To avoid complications, users should keep business and personal accounts separate and ensure they accurately report income, especially from side jobs or freelance work.
