Side Hustle/Gig Economy Reporting- Part II

In our previous blog Side Hustle/Gig Economy reporting we discussed how if

you had a side hustle or had earnings from the Gig economy you could expect

to be getting a tax form from payment apps like Venmo, PayPal or CashApp.

Well, now you are less likely to receive one for 2022, thanks to a change from

the IRS. The agency on Friday, December 23, 2022, announced a one-year delay for a

new tax reporting rule, requiring payment services to issue Form 1099-K for

business transfers over $600, and many tax experts have applauded the

change.

The IRS said it would return to prior thresholds where e-commerce platforms

would only be required to send 1099-K forms to entities that earned $20,000

in payments from over 200 transactions in 2022.

While a single transfer from 2022 could have triggered the form, the IRS has

delayed the timeline by one year “to help smooth the transition,” acting IRS

commissioner Doug O’Donnell said in a statement.

‘The IRS decided a transition period was necessary’

Although many of us, tax professionals welcomed this announcement, certain

organizations such as the American Institute of Certified Public Accountants

are still pushing Congress for reform.  

“While the AICPA is grateful to the commissioner for this reprieve, we urge

Congress to strongly consider previous recommendations to raise the

threshold, possibly in accordance with the present-day cost-of-living levels,”

group president and CEO Barry Melancon said in a statement on Friday.

You must report business income, even with no 1099-K

However, one very import thing remains true, regardless of whether you

receive a 1099-Ks or not, you still must report business income on your tax

return. We urge you to track earnings from all sources and keep personal and

business accounts separate for payment apps.

Also, as we discussed in the first blog, if you had side hustle or generated

income within the gig economy, it’s critical to save your expense receipts to

make sure you are taking full advantage of all available deductions to

help reduce your tax liability. They will also be needed in the case of an audit.

The IRS is eventually going to pick up on these things, so you will want to be

prepared.