Springfield accountant explains new IRS rules for money transferring apps
SPRINGFIELD, Mo. (KY3) -
Money transferring apps like Venmo, Zelle and Cashapp are continuing to gain popularity. Some users will be taxed if their payments exceed $600. PolitiFact said the American Rescue Plan that passed in March will require those to report their earnings on commercial transactions not personal.
This goes into effect at the beginning of the year. Previously, people were required to report only business transactions over $20,000 with at least 200 separate payments in a year.
Springfield accountant Terry Breazeale said the IRS is cracking down on the tax cheats, which are people who don’t report all of their income.
“In a situation where you’re buying things in order to resell them, then basically you have to report everything from your first dollar,” said Breazeale. “You report whatever comes in and whatever expenses you have that goes out.”
Another proposal from the Biden administration is for financial institutions to report all deposits and withdraws from accounts that exceed $600. Breazeale said if this would go into effect it would be all about the numbers.
“They don’t monitor the details,” said Breazeale. “What the proposal is, is just to have the banks report the gross figures. They’re not reporting all of the details of your transactions. It’s just basically two numbers that the bank would report to the IRS at the end of the year. How much money went into the account and how much money came out of the account and total for the year.”
Breazeale has noticed more of his clients are starting small businesses. He wants to remind those that any sale you make needs to be reported.
”They’re not going to check on a couple of $1,000 in difference that they can’t reconcile to your tax return,” said Breazeale. “For instance companies who do a larger amount of volume. If you’re reporting $500,000 of revenue, but your bank says you had a $1-million coming into your bank account, you might want to take a look at that.”
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