The IRS Is Cracking Down On Business Owners Who Use Cash App
The FEDS are cracking down on business income reporting, and your Killeen area business could be affected.
Do you use Cash App, Venmo, PayPal or Zelle for personal use or business?
If you answered yes, you could be affected by the new IRS rule that's taking effect on January 1st, 2022. This new initiative will allow the government to look into any transactions with the apps above that's over $600.
What does that mean for you and your business?
While your transactions are safe the lines can become a bit blurry if you are using the same account for both your business and your personal life. A lot of business owners who may offer services such as hairstylist, esthetician's, barbers, etc typically use the same account when accepting payments. A flow of large sums of money could potentially cause a red flag for you.
According to KXXV, this new rule has been put into place to bridge a tax gap of billions of dollars from lack of taxpayer compliance in reporting. previously the IRS didn't look into accounts unless the transactions reached $20,000. With a little over a $19,000 difference business owners should beware.
What should you do moving forward?
Business owners are being advised to create a separate Cash App account from their personal and you should also keep a good record of all taxable transactions and those that are not. If you fall into the $600 or more category be on the look out for a 1099-K form during tax time next year.
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