URGENT: $600 IRS Rule Changes Everything This Year!

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The $600 tax rule change is the IRS reporting requirements for third-party payment platforms like Venmo, PayPal, and Cash App. This change affects how transactions for goods and services are reported to the IRS, and it came into effect starting in 2024. Here's a breakdown of what this means and how it might impact you:

What is the $600 Rule?
Starting in 2024, third-party payment processors (like PayPal, Venmo, Cash App, and others) are required to report transactions to the IRS if the total amount of payments for goods and services exceeds $600 during a calendar year. This is a major change from the previous threshold of $20,000 in payments and 200 transactions. Now, even if you only make one transaction worth over $600, the payment processor will send you a Form 1099-K and report the income to the IRS.

Why Did the Rule Change?
The change was part of the American Rescue Plan Act of 2021, which aimed to improve tax compliance by increasing transparency in how individuals and businesses receive payments for goods and services. The idea is to ensure that income earned through platforms like PayPal and Venmo is accurately reported and taxed, especially for people using these platforms to conduct business or side gigs.

What Does This Mean for You?
Small Business Owners, Side Hustlers, and Freelancers:

If you’re running a small business, freelancing, or engaging in side gigs and you receive payments for goods and services via third-party payment platforms (Venmo, PayPal, etc.), this rule could affect you.
If you earn more than $600 in a year, these platforms will report the income to the IRS, and you’ll likely receive a Form 1099-K showing the total amount you’ve received.
You must report this income when filing your taxes, even if the income was for personal items or services you sold occasionally (not just for businesses).
Casual Sellers:

If you’re simply selling personal items occasionally (like selling clothes on eBay, selling furniture on Facebook Marketplace, etc.), and you don’t make a profit, this rule could still affect you. If you cross the $600 threshold in payments for goods or services, those transactions will be reported to the IRS, even though you may not owe taxes on them if they are personal sales.
Keep in mind, you won't be taxed on the sale of personal items at a loss. However, if you sell items at a gain (i.e., for more than you paid for them), you may need to report it as taxable income.
Gift and Personal Payments:

The rule applies to payments for goods and services, not personal payments or gifts. For example, if a family member sends you money for a birthday gift via PayPal, that wouldn't be reported. However, if they pay you for a service (like babysitting or a personal project), that could be considered income and reported to the IRS if it exceeds the $600 threshold.
What’s Not Affected:

Friends and family transactions for gifts, splitting bills, or reimbursements are not subject to this rule. It’s only payments for goods and services that count. The distinction can sometimes be blurry, especially if you're running a small business and accept payments for personal items, but it’s crucial to keep track of how payments are categorized.

In short, this $600 rule change means more oversight and potential tax obligations for those receiving payments for goods and services through third-party apps. Whether you're selling items occasionally or running a business, it’s crucial to stay aware of this rule and report your income properly.

Brought to you by:
Jerry Pinkas Real Estate Experts
604 N 27th Ave
Myrtle Beach, SC 29577
843-839-9870

Disclaimer: All information given in my videos is meant to be educational. This video is not intended to replace your research or provide legal, investment, or financial advice. For legal advice, consult a lawyer.
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Thank you for posting this. I hated this law from the very beginning because it’s double taxation for people who are just selling their own belongings that they’ve already bought with after tax dollars. I’m not a big business. I don’t sell stuff for profit. Most of the stuff I sell is at a loss, but I still have to pay taxes on it. That’s absolutely ridiculous.!! I’m glad I saw this video because I wasn’t aware that they postponed the ruling or set it at $5000 for 2024. I stopped selling several months ago once I reached the $600 limit because I wasn’t aware of this. I have a lot of things I wanna sell because I’m getting older. I don’t use them anymore. I want to downsize, but I don’t feel like I have to pay taxes on stuff I already paid taxes on, specially that I took a loss on. 🤦🏼

skyhawksever
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The IRS is America's version of the Gestapo. Our government always makes everything more complicated.

wdjozrh
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It’s amazing how much damage Democrats did in just 4 years. Absolutely disgusting.

upforanadventure
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The Inflation Reduction Act is hundeds, if not thousands, of pages long in which our supposed representatives "lump" unpopular provisions into the text, most of which would never become law if they were separated out and saw the light of day.

This particular law is so wildly unpopular that even the IRS has delayed its full implementation for the past two years. It was deferred entirely for 2023 tax filers. This year, the cutoff was raised by the IRS to $5000 instead of $600.

The public has been in an uproar and I hope it continues until this law is repealed entirely.

thecafezil
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When do we start throwing the tea overboard?

yiannikal
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It was designed to go after smaller groups and reg people never big companies

thepatriot
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I'm 54, and my husband and I are deeply worried about our future. Gas and food prices seem to rise daily, and what little savings we had have been drained just trying to keep up with the skyrocketing cost of living. We can get by, but getting ahead feels impossible. It's disheartening to see decades of hard work undone by a system that seems stacked against us.

Now, with retirement on the horizon, things look even bleaker. News reports predict record numbers of retirees struggling due to inflation, reduced benefits, and shrinking pensions. It's heartbreaking to think that after 30+ years of nonstop work, so many are left with so little. My heart goes out to anyone retiring in this crisis. We deserve better than this.

martyedgar
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We're in our 60's and downsizing. We were selling unwanted items on the platforms for less than we paid for them. We don't want to deal with complicated tax forms, or have to pay a preparer to sort it all out. When we clean out rooms, we just toss the unwanted items into the garbage instead of trying to sell them. It is just not worth the hassle of dealing with a 1099.

craiglarson
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Not charging tax shouldn’t be considered a loophole

goldtop
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I stopped selling random decluttering items on eBay when all of this started. And our personal business accepts no online payments. Old fashion checks only.

Boringcountrylife
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This is crazy - I already paid taxes when I bought this "sofa"! Hopefully this will be cancelled!

VK-ztsw
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I know a small business owner (services) that only takes Zelle, cash, or check because of this law.

tsparky
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If we agree they can tax us for a penny, we are also agreeing that they can tax us for whatever they want.

TheyCallMeSir_H
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They need every penny they can squeeze out to send to Ukraine.

chodkowski
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_”Wealthier individuals.”_ So many _wealthy individuals_ making $600 in transactions over a year. They would’ve raised the threshold if they wanted to target rich ppl, not lower it.

MitchMcConnellsTurtleShell
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Just get rid of the IRS and start over with something we can control

marksr
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That's an excellent move. Now if you sell your kids bike the GOV wants their cut. That's not gona cause a revolt.

leos
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Cash is still king BUT they are making it harder and harder to use and easier and easier to use digital and it’s all about control. I dread the day they switch to CBDC.

Rejoicewithsinging
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I don't use any of these platforms to send money

tonyn
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The country is going broke. So they have to screw the little guy.

ksiebert