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Venmo, PayPal, Cash App must report payments of $600 or more to IRS
- bbarn 5y agoSince leaving the US, the idea that these services exist now boggles my mind. Here (Iceland) it's free to transfer money between individuals via your bank. You simply give them your ID number and bank account and it's done instantly. US Banks are leagues more advanced than the ones here, and the only reason services like this exist is so that banks can directly or indirectly make money from them. People in the US need to demand better from their banking institutions.
- koolba 5y agoIf they simply provided a separate “input” and “output” account number, it’d solve 99% of the problems with the US banking system. As it is now, anybody can submit an ACH for whatever account they’d like and the onus is on the target to monitor their transactions. All it takes is a routing and account number. It’s seriously insane.
- paranoidrobot 5y agoI believe that's also a US-specific problem. In Australia, a regular person with knowledge of my bank code (BSB) and my account ID isn't able to withdraw money from my account, but they can send me money. It's very low risk. For the last few years I've been able to associate a phone number or email address to my bank using PayID[1] which eliminates even that. The BSB + Account ID can be used to set up direct debits, it's intended for ongoing/regular payments like utilities/rent/etc. Because it requires a fair bit of paperwork/infrastructure to get registered in that system, I don't think anyone would be able to get away with scamming using it for long. [1] https://payid.com.au/ https://payid.com.au/
- deleted 5y ago[deleted]
- rhuru 5y agoThat is not entirely true. A random entity can not withdraw only certain authenticated entities can. The cost of stealing is very very high.
- jdavis703 5y agoThe same is true in the US. ACH and wire transfers can be free (unless you're with a bank that offers "free checking" but comes laden with hidden charges). And we also have Zelle, which offers much faster transfers (it works within minutes) for free.
- millzlane 5y agoI wish Zelle worked with my CU. Or my CU worked with Zelle rather.
- pxx 5y agoZelle falls back to using the visa debit network. You don't need affirmative support from your credit union.
- commoner 5y agoZelle has a low sending limit if your bank or credit union is not partnered with them: > If your bank or credit union does not yet offer Zelle®, your weekly send limit is $500. Please note that you cannot request to increase or decrease your send limit. https://www.zellepay.com/faq/there-limit-how-much-money-i-can-send https://www.zellepay.com/faq/there-limit-how-much-money-i-ca... In addition, if your financial institution is not partnered with Zelle, you can't send money to anyone whose financial institution is also not partnered with Zelle: > If your bank or credit union does NOT offer Zelle®- The person you want to send money to, or receive money from, must have access to Zelle® through their bank or credit union. https://www.zellepay.com/faq/who-can-i-send-money-zelle https://www.zellepay.com/faq/who-can-i-send-money-zelle
- brewtide 5y agoI once had someone send me a decent sum of money using Zelle, but I had no Zelle account. I tried to set one up, CU not supported. Went the Debit route -- Also, in my case, not supported. After a few phone calls with their customer service department, it was evident that it was not going to work out. ALSO, they had no way to 'refund' that person the sizable amount of money beyond waiting the 2 weeks or so it takes for that money to be 'unclaimed', and thus reverting to the originating account. So, for 2 weeks, thousands of dollars were 'stuck' in no mans land. It all resolved out, when the timeframes were hit, and transactions reversed, but it still boggles my mind that they do not have a method beyond this when such cases arise.
- yurishimo 5y agoI think most banks have solutions for this (ACH generally) but the UI sucks which is obviously a problem as well as the latency. Latency is getting better and I think 2022 is the year a big change to the ACH system is getting rolled out that should decrease that wait time to less than 24 hours for most transactions. But you'll still have all of these companies vying for the in-between so they can make money investing transitional funds. Now you see services like Cash.app moving to a more bank-like structure with a debit card and Apple Pay, so they can keep that money in their system and they can continue to do stuff with it. I agree with your broad point though. This should be easier in the US.
- BHSPitMonkey 5y agoMost banks support Zelle (formerly ClearXChange), which uses ACH on the back-end but delivers funds essentially right away. The problem is that (1) most consumers don't know this is a thing, and (2) as you said, the UX of sending money through Venmo is generally far better than having to log in to your institution's mobile banking app, get past MFA, and then find the option to send money to someone. Zelle also lacks the concept of requesting money (I think), and that feature is a big QOL advantage in my experience.
- fragmede 5y agoZelle is a fucking joke. I spent 2.5 hours between three departments because Chase locked my account because I tried to use Zelle to send money. They locked my account until I reached the right department, which had this very important concept for me, which I will now share with you: If you give someone money, the money is no longer yours. After sharing this mind-blowing concept, they unlocked my account. Bank of America was slightly less aggressive, and merely flagged the transaction as fraudulent (which required another phone call to complete - and they had the same concept to share with me). By owning both ends of the transaction, the UX of Venmo is so much better it isn't even funny. I will never use Zelle again if I can help it. Zelle's limitations (set by each bank) are as bad as Venmo's (eg can only send $2,000/month to a recipient), at which point I might as well just keep using Venmo.
- speedyapoc 5y agoCanada here. These US services seem amazing. We're limited to "Interac e-Transfers" with archaic send times, terribly low maximums, and even per-transaction fees.
- digianarchist 5y agoTo be fair most banks waive the fee. I agree with the minimums and send time. It’s ridiculous that a transfer I make every week to my wife takes 30 mins to complete. Slower than Bitcoin.
- rnotaro 5y agoI don't have the same experience. All my canadian banks are covering my fees and 80% of the time the transfer is instantaneous. Most of the time under 5 minutes. Interac E-Transfer minimums are 0.01$. Money is going straight into my checking accounts.
- digianarchist 5y agoTangerine in particular appear to be the problem with slow transfers.
- rchaud 5y agoI pay a cleaning service regularly w/ E-transfer and the money is deposited within minutes. My bank imposes a $3,000 daily limit, which is more than US services seem to allow in a month.
- klyrs 5y agoMy bank has a daily limit, but I've always found it easy to just call and ask them to raise the limit for the day. A minor inconvenience, but I'd not like to accidentally spend more.
- asdff 5y agoHow can you demand better of your banking institiution when the banking institution can outspend your grassroots efforts in advertising ahead of the election to put in a yes man, and said yes man recieves an order of magnitude more in donations from the banking institution than what your grassroots effort could ever raise from individual voters, along with a favorable consulting position once they are out of office with said banking institution? The whole system is designed by corrupt people to make it very easy to be corrupted, and very hard to ever systematically eliminate corruption. Hard to simply demand better when you are so beholden to this broken system.
- lotsofpulp 5y agoIt is not the fault of the private banks. The US government wants to hold banks liable for their customers transferring money, which is the reason all the abstractions exist. The US government has always had the opportunity to come out with a digital equivalent to cash, that they policed rather than selectively hold private entities liable. Supposedly, this is coming out soon called FedNow. https://www.federalreserve.gov/paymentsystems/fednow_about.htm https://www.federalreserve.gov/paymentsystems/fednow_about.h... Electronic money transfer should be a government utility, subject to courts rather than private business’ whims. Although, the US government does like sitting on the sideline and maintaining plausible deniability.
- _bfhp 5y agoif US leftists didn't hate unifying around class consciousness and everyone else didn't hate protesting so much they would probably call for the Boston Tea Party rioters to be hung if they were alive then, we might be able to have a more intuitive sense of what "demand better" means when our friends across the ponds suggest it
- PragmaticPulp 5y agoThis is specifically for “goods and services” transactions, which can come with additional protections through PayPal if the seller never delivers or otherwise tried to defraud you. You can also just send the money to their bank account if you really wanted to, but nobody actually likes doing that when you can use the protections (however imperfect) these services provide.
- TrackerFF 5y agoHere in Norway a service called "Vipps" is pretty much the standard now. No fees for transfers under 5000 NOK or something like that...around $600. It's pretty much instant. I think most countries have solved this problem by now - i.e instant transfer through apps. Seems like every country has their own service. Would be nice to get some larger unified version - that'd be cool.
- sofixa 5y ago> Would be nice to get some larger unified version - that'd be cool. There's SEPA and SEPA Instant for the eurozone, and they are awesome ( free, fast, reliable, only an IBAN required).
- Scoundreller 5y ago> Here (Iceland) it's free to transfer money between individuals via your bank. Yes, but what’s the average Icelander’s monthly bank account fee? In the US, it’s a bit fat zero.
- kjaftaedi 5y agoWe don't have bank account fees. Another fun fact: pretty much everyone here pays off their credit card every month. The bank will close your account if you do not. Of course there are exceptions, but this is the general rule. (if you need money the bank will lend it to you and help you arrange payments)
- emptysongglass 5y agoI don't know if Iceland follows in lockstep with the rest of EU monetary policy but here in Denmark, they take your money another way: negative inflation applied to comically low limits (100,000 DKK) equivalent to $15,000 USD.
- CogitoCogito 5y ago> In the US, it’s a bit fat zero. It seems you get what you pay for.
- smsm42 5y agoGiven alternatives for sending money do exist (and free), I'm fine with paying zero for a bank account.
- CogitoCogito 5y agoMy Swedish bank account does indeed incur monthly fees whereas my American bank account does not. That said, when comparing the quality of Sweden's system for digitaly sending money to the one in the US, I would gladly pay something similar if the US adopted a system like Sweden's. So I guess I'll just repeat what I said in my last post: It seems you get what you pay for.
- progforlyfe 5y agoI've actually had decent luck using Zelle in the past 2 years for local transactions for second hand marketplace transactions (used furniture and stuff). It's not fully bank native, but quite close it seems.
- moneywoes 5y agoIn Canada we have E-transfer which providers similar functionality
- smsm42 5y agoTransfers between banks are free in the US too (if you mean ACH transfers, Wires cost $30, but the only time I used a wire is paying the downpayment for my house). But setting up ACH link is both relatively complex and dangerous, since once it's set up, it can be used to move money in both directions indefinitely. Thus, not very useful for between-persons payments. Banks have other systems for such payments, but there are so many different ones that the chance random person has a bank with the system you know how to operate that is also supported by your bank is pretty low. Thus, Venmo. Paypal is easier to explain - they were born at the time banks and payment processors weren't really sure this whole internet thing is not a passing fad, so they didn't do anything. And now they have a huge incumbent advantage.
- salamandersauce 5y agoYes, but that's the point. For instance here in Canada we have Interac eTransfer which is supported by every bank. You go on your bank's app or website and you enter the email of the person you want to send money to and how much and a little password type thing and that's it. I don't need to know my friends bank info just their email. On the receiver side you just get an email and then you can pick what bank you want to deposit it in and log in as normal. And every bank has it for free these days (some used to have a $1 fee).
- Kiro 5y agoI don't know. In Sweden we can do the same but everyone still uses Swish where your phone number is your identifier. No-one remembers their bank account number.
- hamandcheese 5y ago> The change was made when the American Rescue Plan was passed in March 2021. This is why people fucking hate congress.
- ur-whale 5y ago> This is why people fucking hate congress. Wholeheartedly agree. And to go one step further: how many percent Americans would have voted yes to something like this if they had been asked directly? Representative democracy is utterly broken.
- vkou 5y ago> Representative democracy is utterly broken. It's the worst form of government, except all the others that have ever been tried. You are right on one count, though, there are a lot of broken aspects to this particular flavor of representative democracy. It's the sort of thing that happens when you keep version 1 running in production for 250 years, with limited ability to patch it.
- deleted 5y ago[deleted]
- ur-whale 5y ago> It's the worst form of government, except all the others that have ever been tried. I disagree. There are places where direct democracy works quite well and has for a very long time. The US certainly isn't one of them.
- boromi 5y agoWhat was the rationale for adding yet more complexity for us filling taxes...
- loeg 5y agoThis doesn’t affect personal taxes.
- jdavis703 5y agoA lot of people freelance, landlord or do other activities that are classified as "businesses." So it, actually does personally affect a lot of folks who aren't even full blown businesses.
- vorpalhex 5y agoFreelance and being a landlord is in fact a business and you do in fact need to pay business taxes as appropriate. Again, this does not change personal taxes.
- asguy 5y agoPlease explain what a “business tax” is in the US. Personal taxes are definitely affected if you happen to do business as a sole proprietor. They’re even affected if you happen to have an LLC with passthrough taxation.
- deleted 5y ago[deleted]
- vorpalhex 5y agoIf you form an llc, and if you pay passthrough taxes instead then you are perfectly well aware that you are a business and that passthrough taxes are saving you paperwork. If not, your CPA can explain this to you.
- BHSPitMonkey 5y ago
- gaogao 5y ago> It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into. Reading just the title, you might assume this means personal payments too.
- willis936 5y agoI hope so. Do I need to report rent splitting? What fresh tax hell would that be?
- Spivak 5y agoThis only applies to business transactions so just continue doing what everyone does right now which is mark your purchases as personal with an innocuous comment like “taco Tuesday” or for larger purchases “sorry I dropped your laptop.” Like I’m not the IRS, if some small artist on TikTok wants to commit tax fraud by not reporting my purchases or charging sales tax that’s on them. I’m not gonna narc.
- alx__ 5y agoI will continue to use emojis then
- fermentation 5y agoDoes this need to be done for things like splitting rent? I'm charged the full amount monthly and my partner sends half to me.
- vorpalhex 5y agoYour landlord will be in trouble if they are not reporting your payment. As you are just splitting a payment you would mark it as personal.
- ne0flex 5y agoI was regarding comments on Reddit regarding this. One person from California gave an anecdote from a few years ago saying he would pay rent from his account and his roommate would give him their half in cash. He ended up getting flagged by the IRS for having $8K in deposits. He tried to dispute with the IRS, showing rent receipts and deposits, but he still ended up having to pay taxes on the $8K in addition to penalties. I'd imagine some similar situations will crop up with this change. (Let's face it, the IRS will probably be looking at all transactions and not just those marked as business transactions.)
- stjohnswarts 5y agoKeep all your paperwork, the tax man will be knocking otherwise.
- 5y ago
- obblekk 5y agoThis only applies to “business” transactions and the labels are largely self reported. > Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law. This effectively guarantees self reporting obligation (even if the buyer reports it as a commercial transaction).
- quickthrowman 5y agoHow about the IRS focuses on the major tax cheats instead of shaking down the proles for loose change? The game is rigged, use every opportunity you have to break the rules to get ahead because the people who lord over us definitely are.
- alx__ 5y agoBecause they are constrained by Congress and lobbyists. We'll never be rid of TurboTax or HR Block :(
- thathndude 5y agoI’ve never understood this. You can get $500 from 1,000 tax payers. But wouldn’t those same resources be better spent targeting ultra high earners? The TAM of unpaid taxes Has to be substantially larger when it comes to high earners
- tzs 5y ago> I’ve never understood this. You can get $500 from 1,000 tax payers. But wouldn’t those same resources be better spent targeting ultra high earners? Ultra high earners can afford sufficient lawyers to turn it into a THX-1138 situation for the IRS. Certain elements in Congress have encouraged this by doing everything they can to cut the IRS budget. From 2010-2018 the budget was cut sufficiently to cause the IRS to cut its enforcement staff by 30%. Here's an article about it [1]. Some of the numbers in there are shocking. E.g., > Without enough staff, the IRS has slashed even basic functions. It has drastically pulled back from pursuing people who don’t bother filing their tax returns. New investigations of “nonfilers,” as they’re called, dropped from 2.4 million in 2011 to 362,000 last year. According to the inspector general for the IRS, the reduction results in at least $3 billion in lost revenue each year. Meanwhile, collections from people who do file but don’t pay have plummeted. Tax obligations expire after 10 years if the IRS doesn’t pursue them. Such expirations were relatively infrequent before the budget cuts began. In 2010, $482 million in tax debts lapsed. By 2017, according to internal IRS collection reports, that figure had risen to $8.3 billion, 17 times as much as in 2010. The IRS’ ability to investigate criminals has atrophied as well. [1] https://www.propublica.org/article/how-the-irs-was-gutted https://www.propublica.org/article/how-the-irs-was-gutted
- rpowers 5y agoThis is fantastic news as my wife has been complaining about scalpers on apps like Mercari and Poshmark.
- bredren 5y agoCan you explain more about what your wife means by scalpers on these services?
- vngzs 5y agoPeople who buy and resell collectibles or clothing for considerable profit with no intention of using the items themselves. The term is frequently associated with concert tickets, where people with no intent of going to a concert will drive the ticket prices up and skim a profit.
- bredren 5y agoI see. I’m familiar with its use in ticketing. I’ve noticed arbitrage opportunity in some markets where items are sold far below market value because they are intended for a neighbor or just that community. Is your wife seeing low priced items sourced from those marketplaces, or sold on those marketplaces?
- neither_color 5y agoYou will receive the forms beginning next year for this year’s transactions. The form will be used to fill out your 2022 income taxes that are due in April 2023. It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into. Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law. This is the part I don't get. If I sell old used phones or laptops, never at a profit, how does ebay know I'm not profiting? They just report anyway.
- csomar 5y agoThey don't. You'll probably need to report these transactions and get them straightened out with the IRS. Which they can't (since it's lots of people and they are probably cross-checking automatically). This will just get people flagged. And before someone blurb out the usual crap about pay your taxes and that shit. 1. This is $600 total per year (from what I can gather) and not $600 per transaction. 2. People who do not invoice and not pay taxes on these amounts, are usually working on thin sidelines. Most legitimate businesses/transactions will require an invoice. and 3. This will kill any flexibility of doing small work and only becoming regularized once it's worth it. If you made $800 of freelance work, is that really worth the headaches of reporting it? Might as well not do the work and avoid the paperwork involved with that. And let's not talk about all the confusion that is going to arise from people, family and friends transferring money to one another. If really enforced, this is a clusterfuck for those making less than minimum wage and doing casual side hassles. The funny thing is that many people (reading reddit/news sites) think this is a good idea because it'll catch the "tax evaders". > "Yellen has argued that the move will reduce the amount hidden by billionaires" What a circus we are living in.
- etataetaet 5y agoYep it really sucks. I'm a small eBay seller and do it 99% for fun! I make very little money per time spent but I can easily sell over $600 worth of product in one year. This makes it super annoying and basically not worth it anymore!
- deleted 5y ago[deleted]
- hunterb123 5y agoThis was known Democrat policy for awhile. Why is everyone acting surprised?
- hffft 5y ago
- aaomidi 5y agoI feel like I'm the only progressive that wants a decrease in taxes. Seriously I don't want anyone making under 100K to pay taxes. Heck maybe under 150K. We have so much fucking money in this govt that we seriously don't need more taxes. Let's use the money we have to make shit better for people first, before we ask them to give up more of their $€£¥
- oldstrangers 5y agoYou can allow those making under 100k to pay a lot less in taxes by making the ultra rich pay a lot more in taxes. Pretty simple solution.
- aaomidi 5y agoI'm just tired of spending so much money on stupid shit (we're spending more by the govt on healthcare per capita than like, every other country??) More taxes isn't going to make that better :(
- stjohnswarts 5y agoI sinking it all in equities and real estate so they can hide it and not pay taxes on it.
- stjohnswarts 5y agoMine are approaching 40% when you look at the overall tax burden, how much do they want?? I agree with you.
- imwillofficial 5y agoMeanwhile, the ultra rich get ultra richer
- refurb 5y agoFirst off the deluge of data the IRS will get means they won’t be reviewing all of it. More importantly, is this just an example of regulatory capture by the payment platforms? I used to pay my landlord rent through PayPal, “friends and family” no fee. Now PayPal will ask if that’s a business transaction? (Which I recognize it is, but now it’s a legal requirement to tell PayPal?)
- MeinBlutIstBlau 5y ago[dead]
- from 5y agoWhen the $10k (~$70k today) reporting threshold for cash deposits was set in the 70s, it was taken to the Supreme Court. Now we all celebrate "compliance." Interesting change.
- tzs 5y ago> A tax law that takes effect in January will require third-party payment processors like PayPal, Venmo and Cash App to report a user’s business transactions to the Internal Revenue Service if they exceed $600 in a year. How about Zelle? Did the article just fail to mention it, or is Zelle not considered to be a third-party payment processor since it is offered by the banks themselves?
- thethimble 5y agoThis law applies to business transactions only - not personal transactions. Presumable you can’t Zelle a business.
- tzs 5y agoBusinesses can use Zelle at several banks, including Bank of America, Chase, Citi, U.S. Bank, and Wells Fargo.
- jmpman 5y agoSo, I elect the Democrats, with promise of healthcare reform, free college tuition for my kids and environmentally friendly policies. Instead, I now have to file a W2 for my new nanny, complicating my taxes and hers. After my nanny takes the standard deduction, they’ll collect minimal additional taxes. A wasteful policy that just increases governmental overreach.
- loeg 5y agoThe household employee clarification was in 2015. And nannies are employees. So yeah, you give them a W2 and they pay normal income taxes, like we all do on income we earn. Are you saying there should be a special tax reporting and collecting exemption for domestic workers?
- jmpman 5y agoThere’s already an exception of up to $2300/year for a nanny tax. Less than that, and you don’t have to file for them. Yes, they should have dramatically increased the nanny tax exemption - ideally up to the standard deduction.
- loeg 5y agoThe lower exemption is intended for like, occasional babysitting. A full-time nanny earns more like $40-50k around here; somewhat less elsewhere, but not less than half that. Still -- why should nanny income up to the standard deduction not be reported? Other workers making similar income have their income reported and are responsible for filing and paying taxes.
- jmpman 5y agoMy gardener is very likely working illegally, and not paying taxes. My house cleaners are likely not reporting their income for taxes. But the nanny, working part time, making around $10k/year, I have to consider my employee, provide her a W2, submit forms to the IRS. The difference is that I don’t have to consider the gardener or house cleaner as my employees. Also, notice that my nanny’s total income is less than the standard deduction. She’s ultimately paying no taxes, just like my gardener and house cleaner. If the democrats want to increase tax revenue, pass laws that reward people for turning in under reporting of inter-generational wealth transfer - like Trump received. If accountants and lawyers can claim 10% by turning in their customer’s fraudulent tax schemes, the country will collect substantially more than this legislation.
- stjohnswarts 5y agoThis is the kind of garbage that pushes me towards libertarianism as the years progress. What's the point of electing democrats if their main concern is putting more onerous paperwork on the lower classes while the elite still make only laws that are to their benefit. I personally think we have a right not to be monitored in everything we do, and we are assumed to be criminals and have to file paperwork to proved that we aren't. It's getting entirely ridiculous.