New tax rule could impact income from side hustles, small businesses
WICHITA, Kan. (KWCH) - If you have a side hustle, heads up. The IRS will now tax anyone who receives more than $600 in payments for goods or services processed by third-party payment apps like PayPal, CashApp, or Venmo. If, for example, you mow lawns, babysit, or own creative side hustle and accept payments over Venmo, PayPal, or CashApp, this could impact you. The change aims to crack down on unreported taxable income.
Maureen Nauslar has cleaned houses for the last 30 years.
“It was something to supplement my son’s gymnastics; we traveled every weekend,” she said.
Sometimes her customers pay her through the family and friends option. But now, the IRS says you can no longer do that. The money coming in from your job, trade, or side hustle will need to be taxed for those making more than $600 per year.
She said,” they called and wanted to Venmo me the payment, so I downloaded the app and started using it. It’s quite convenient.”
But now, it might not be as convenient for small businesses. Nauslar says the main reason she would stop using the app is, so she isn’t double taxed.
Tax expert Joshua Cicora said next year, people like Nauslar can expect a 10-99 form in the mail.
“Because if you are doing something where you are trader business, you should be paying taxes on that, and this is just trying to capture things otherwise not being reported,” Cicora said.
But if you are trading money for personal reasons to friends and family for things like dinner, it will continue not to be taxed.
“If you do have personal and business, keep them as separate accounts,” Cicora said. “That way, you can say, ‘this is all personal, it’s not taxable,’ and, ‘this is all business, and it is taxable.’”
Nauslar said if she is taxed on her income, she might have to go back fully to only accepting cash or checks.
Before 2022, the threshold to receive a 10-99K from as $20,000 in sales and 200 transactions. Both requirements had to be fulfilled. Third-party selling apps like eBay are currently lobbying the federal government to raise the threshold back to where it was.
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