Electronic payment services like CashApp or Pay{al will now need to report transactions over $600 to the IRS under new rules.
This includes Venmo, PayPal, Zelle, and Cash App.
From Jan. 1 on those services must report commercial transactions worth $600 or more.
Related: Bank, Venmo, CashApp transactions reported to IRS for 2022
This will require taxpayers to use a 1099-K form whenever a person makes over $600 per year in commercial payments.
The IRS said this is a law under the American Rescue Plan. After COVID-19, the American Rescue Plan was created as a response.
The former rules were that the payment companies needed to report over 200 commercial transactions to the IRS, or a total exceeding $20,000 in one year.
Related: People who make an income using sites like Etsy and eBay will now need to pay taxes for making over $600
What about paying friends and family?
PayPal and Venmo both offer ways to choose peer-to-peer transactions for goods and services.
Choose Goods and Services. This includes paying for dinner with friends or for things off Craigslist.
By choosing this, it signifies that it isn’t a small business transaction requiring reporting to the IRS.
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