Do you use Venmo or Zelle, or PayPal to accept payments from customers or friends? There’s some new information that you need to know about for 2022 and beyond. If you collect more than $600 into your account during the year, you’ll be getting a 1099K from that provider from either Venmo or Zelle or PayPal or other services like that.
Now that’s going to report that income to the I.R.S. as well. So they’re going to expect to see your account for that. Now there are a lot of open questions about how this will work. Many people use Venmo or Zelle to collect food payments from people. If you go out to dinner with friends and they send you their half of the money, you don’t have to wait on a split check, people are doing this for all kinds of personal uses, but we have seen people dabble in this with their businesses.
So keep in mind if you’re going to do this, make sure you’re using a business account and have your business transactions fully separated from any personal transactions. Doing this will help us when we come a time at the end of the year to break this up. If you have any taxable income flowing through that account, please don’t commingle it with personal.
We want to be able to keep track also of those transactions. They will typically ask you if this is for goods or services or personal. When you make the payment, make sure you note what that payment is about to help you at the end of the year. So you don’t have to go back through and wonder what that one was for? Or you have a good audit trail to prove it if the I.R.S. ever came to ask you what those funds transfers were for.
Many people are using these pretty free forms, and they’re gonna have a lot more effect, when you get that statement at the end of the year and you have to account for it. So be prepared, be ready, and make sure that you are documenting all your business, payments, or receipts in an appropriate way, separate from your personal life. Hope this helps you and watch out 1099K’s will be coming around this year.
I’m Donna Bordeaux with PYOPAccounting.com. Please follow us on Facebook and Instagram. Make sure you check out our blog and our website from the link below. Subscribe to our YouTube channel and hit the bell to be notified when we post. To contact me, email me at email@example.com.
Donna Bordeaux, CPA with PYOPAccounting.com
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