Millions of taxpayers will receive 1099-Ks this coming tax season for the first time. These 1099-Ks will report third party payment transactions totaling over $600 in 2022. This includes from PayPal, Zelle, Venmo, eBay, Amazon, Etsy, Discogs, as well as any other platform that sent you money that came from someplace else.
These 1099-Ks will probably report all payments, not just ones that are taxable income. This is because the third-party payment companies will want to CYA. Also, they may not know if a payment is taxable or not. Thus, they’ll report everything.
1099-Ks go to the IRS as well as the taxpayer. So, that garage full of stuff you sold on eBay for less than what you paid for it, your roommates use Zelle to reimburse you with their share of the rent, and dinner with a friend who paid the bill, and you paid him your share using Venmo will all be reported.
These examples are clearly not taxable payments. However, it will be up to the taxpayer to determine which payments should be excluded from income.
“This is going to be a big honking pain!”, you yell. Yes, it’s going to be. Start getting ready now. For the future, maybe separate accounts into business and personal.