5 ms·

This closes, beginning 2022, a huge loophole (reporting omission) that has existed for the last several years. IRS Form 1099-NEC & 1099-MISC reporting did not i

This closes, beginning 2022, a huge loophole (reporting omission) that has existed for the last several years. IRS Form 1099-NEC & 1099-MISC reporting did not include credit card or other 3rd party payment processor payments, while Form 1099-K also didn't include them unless relatively high thresholds were reached. Now, many more such payments will be reported, encouraging more taxpayers under the U.S. system of "voluntary compliance" (self-reporting attested to under penalty of perjury) to be honest.

abfan1127 5y ago
or the alternative to push payments back to cash only or quit because its not worth the hassle.
- throwaway0a5e 5y ago
  The junk flippers, handymen and professionals taking side jobs will be just fine taking cash. This only screws the "I work through an app" crowd.
  - deleted 5y ago
    [deleted]
  - ch4s3 5y ago
    Yeah, this is seems 100% targeted at gig workers.
  - gowld 5y ago
    Their customers are largely moving away from cash.
- tylerhou 5y ago
  Not worth the hassle of paying legally-required income tax?
  - albatross13 5y ago
    Correct.
  - bthrn 5y ago
    If I sell my old couch at a loss for $600, and get paid with Venmo, the default behavior now is to have a form sent to the IRS. The burden is on me to prove it is a loss and have the documentation to back it up, or risk having $600 of taxable income in the eyes of the IRS. At this small threshold, it sounds like a burden to me.
    - gowld 5y ago
      Separately, even though selling used goods at a loss is deductible on income tax, you can still get chased own for sales tax, thanks to USA's absurd non-VAT sales tax system.
      - PopAlongKid 5y ago
        >even though selling used goods at a loss is deductible on income tax Not if the goods were for personal rather than business or investment use. Losses on sale of personal-use assets are non-deductible for income tax purposes.
      - gamblor956 5y ago
        Every part of your statement is wrong. 1) Selling used goods at a loss is not deductible on your tax return unless you are in the business of selling used goods. 2) Unless you are selling a lot of tangible goods (i.e., you have a business selling things), you aren't even eligible to register for sales tax in most U.S. states. 3) If tax applies to the sale of a used good in this situation, it would be a use tax that is the responsibility of the buyer to report and pay.
    - deleted 5y ago
      [deleted]
    - deleted 5y ago
      [deleted]
- andrew_ 5y ago
  I'm curious to see if this impacts eBay and the high dollar transactions.
from 5y ago
How much revenue will this actually raise? The previous threshold was $20k which makes me think this new policy will mostly just result in the IRS catching the neighborhood bike repairman who made $3k last year on Venmo and didn't report it rather than some shadowy ecommerce millionaire tax cheat.
- andrew_ 5y ago
  This is more legislative theater. "We're catching the cheats" where the cheats are as you describe, middle or lower class households or individuals trying to get ahead with a side hustle. I hope to see this reversed in the near future.
  - UncleMeat 5y ago
    Why should a side hustle on etsy be taxed less than a side hustle working at the local coffee shop?
    - LorenPechtel 5y ago
      The side hustle on etsy will likely have plenty of expenses that come off the income--but now you made the person do things like maintain inventory and the like. The compliance burden is a lot higher. I'd like to see some modified rules for sufficiently small businesses--no inventory, no depreciation, you simply take expenses when they are incurred. This would especially apply to service type businesses where your expenses are consumables and tool replacement.
      - PopAlongKid 5y ago
        There already are rules that avoid most depreciation in this case. The Tangible Property Regulations allow a De Minimis Safe Harbor expense deduction for assets purchased, such as a computer or office furniture. The max amount is $2,500.
    - andrew_ 5y ago
      There's another reply in this post about a scenario of selling a couch on Craigslist, as an example. The burden that comes with a simple transaction is undue.
vmception 5y ago
> encouraging more taxpayers under the U.S. system of "voluntary compliance" (self-reporting attested to under penalty of perjury) to be honest. Ha, yes that is a funny fallacy they use. On the IRS side, they use a social graph and node based system to determine who to look into. If one filer takes a tax deduction for a payment, the IRS then looks to the recipient to see if they paid taxes. When a mismatch occurs, typically of the recipient, they send out the "we determined that you owe us this much" letters. From my experience just talking to people, a very large number of people really believe that only their employer or a their bank is "snitching" on them, and whenever they get a payment outside of those systems they think "they don't have to pay taxes" because "the IRS doesn't know". I really am at a loss of words of how deep tax ignorance goes. The 1099 system and compliance behind the 1099s is also a helpful notice for the IRS' graph system, although not necessary as they can just look at the same filer's deductions, but they can coax more payments as they do have statutory penalties for not filing a 1099.
BitwiseFool 5y ago
>"encouraging more taxpayers under the U.S. system of "voluntary compliance" (self-reporting attested to under penalty of perjury) to be honest." I really dislike the implication of dishonesty. For the average person the IRS is involved in your paycheck, not in your Venmo transactions and Facebook Marketplace postings. I sense this kind of reporting is only going to create resentment, and I hope it does. Edit: I Venmo my sister money for groceries and pizza from time to time because she is in college. I'm well under the threshold for the gift-tax (as long as you are under ~$14,000 a year), but now the IRS has a record of all these transactions I have even more to worry about when it comes time to file. What happens if my "payments" are ~$700 and I don't put that amount in the gift column on my 1040? What about her? Does she need to report this as well? The IRS will know about it. Sure, you could say I was supposed to be reporting this the whole time, but is this a reasonable expectation for transactions so minor and mundane? Were you reporting such things this whole time?
stjohnswarts 5y ago
Yes they weren't draining enough of our incomes already. This should make everyone very happy that we have yet one more avenue for the government to spy on us everyday in every way. This is double plus good.

abfan1127 5y ago

or the alternative to push payments back to cash only or quit because its not worth the hassle.

throwaway0a5e 5y ago
The junk flippers, handymen and professionals taking side jobs will be just fine taking cash. This only screws the "I work through an app" crowd.
- deleted 5y ago
  [deleted]
- ch4s3 5y ago
  Yeah, this is seems 100% targeted at gig workers.
- gowld 5y ago
  Their customers are largely moving away from cash.
tylerhou 5y ago
Not worth the hassle of paying legally-required income tax?
- albatross13 5y ago
  Correct.
- bthrn 5y ago
  If I sell my old couch at a loss for $600, and get paid with Venmo, the default behavior now is to have a form sent to the IRS. The burden is on me to prove it is a loss and have the documentation to back it up, or risk having $600 of taxable income in the eyes of the IRS. At this small threshold, it sounds like a burden to me.
  - gowld 5y ago
    Separately, even though selling used goods at a loss is deductible on income tax, you can still get chased own for sales tax, thanks to USA's absurd non-VAT sales tax system.
    - PopAlongKid 5y ago
      >even though selling used goods at a loss is deductible on income tax Not if the goods were for personal rather than business or investment use. Losses on sale of personal-use assets are non-deductible for income tax purposes.
    - gamblor956 5y ago
      Every part of your statement is wrong. 1) Selling used goods at a loss is not deductible on your tax return unless you are in the business of selling used goods. 2) Unless you are selling a lot of tangible goods (i.e., you have a business selling things), you aren't even eligible to register for sales tax in most U.S. states. 3) If tax applies to the sale of a used good in this situation, it would be a use tax that is the responsibility of the buyer to report and pay.
  - deleted 5y ago
    [deleted]
  - deleted 5y ago
    [deleted]
andrew_ 5y ago
I'm curious to see if this impacts eBay and the high dollar transactions.

from 5y ago

How much revenue will this actually raise? The previous threshold was $20k which makes me think this new policy will mostly just result in the IRS catching the neighborhood bike repairman who made $3k last year on Venmo and didn't report it rather than some shadowy ecommerce millionaire tax cheat.

andrew_ 5y ago
This is more legislative theater. "We're catching the cheats" where the cheats are as you describe, middle or lower class households or individuals trying to get ahead with a side hustle. I hope to see this reversed in the near future.
- UncleMeat 5y ago
  Why should a side hustle on etsy be taxed less than a side hustle working at the local coffee shop?
  - LorenPechtel 5y ago
    The side hustle on etsy will likely have plenty of expenses that come off the income--but now you made the person do things like maintain inventory and the like. The compliance burden is a lot higher. I'd like to see some modified rules for sufficiently small businesses--no inventory, no depreciation, you simply take expenses when they are incurred. This would especially apply to service type businesses where your expenses are consumables and tool replacement.
    - PopAlongKid 5y ago
      There already are rules that avoid most depreciation in this case. The Tangible Property Regulations allow a De Minimis Safe Harbor expense deduction for assets purchased, such as a computer or office furniture. The max amount is $2,500.
  - andrew_ 5y ago
    There's another reply in this post about a scenario of selling a couch on Craigslist, as an example. The burden that comes with a simple transaction is undue.

vmception 5y ago

> encouraging more taxpayers under the U.S. system of "voluntary compliance" (self-reporting attested to under penalty of perjury) to be honest. Ha, yes that is a funny fallacy they use. On the IRS side, they use a social graph and node based system to determine who to look into. If one filer takes a tax deduction for a payment, the IRS then looks to the recipient to see if they paid taxes. When a mismatch occurs, typically of the recipient, they send out the "we determined that you owe us this much" letters. From my experience just talking to people, a very large number of people really believe that only their employer or a their bank is "snitching" on them, and whenever they get a payment outside of those systems they think "they don't have to pay taxes" because "the IRS doesn't know". I really am at a loss of words of how deep tax ignorance goes. The 1099 system and compliance behind the 1099s is also a helpful notice for the IRS' graph system, although not necessary as they can just look at the same filer's deductions, but they can coax more payments as they do have statutory penalties for not filing a 1099.

BitwiseFool 5y ago

>"encouraging more taxpayers under the U.S. system of "voluntary compliance" (self-reporting attested to under penalty of perjury) to be honest." I really dislike the implication of dishonesty. For the average person the IRS is involved in your paycheck, not in your Venmo transactions and Facebook Marketplace postings. I sense this kind of reporting is only going to create resentment, and I hope it does. Edit: I Venmo my sister money for groceries and pizza from time to time because she is in college. I'm well under the threshold for the gift-tax (as long as you are under ~$14,000 a year), but now the IRS has a record of all these transactions I have even more to worry about when it comes time to file. What happens if my "payments" are ~$700 and I don't put that amount in the gift column on my 1040? What about her? Does she need to report this as well? The IRS will know about it. Sure, you could say I was supposed to be reporting this the whole time, but is this a reasonable expectation for transactions so minor and mundane? Were you reporting such things this whole time?

stjohnswarts 5y ago

Yes they weren't draining enough of our incomes already. This should make everyone very happy that we have yet one more avenue for the government to spy on us everyday in every way. This is double plus good.