Short video by Donna Bordeaux explaining that for 2022 and beyond, payment processors (Venmo, Zelle, PayPal, etc.) will issue Form 1099-K to accounts that receive more than $600 in a year, reporting that income to the IRS. The presenter advises separating business and personal transactions, using business accounts, annotating payments, and keeping audit trails to prepare for potential IRS inquiries.
Do you use Venmo or Zelle or PayPal to accept payments from customers or even from friends? Well, 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 into the IRS as well, so they're going to expect to see you account for that. Now there's a lot of open questions about how this will work. Many people use Venmo or Zelle to just collect food payments from people. If you go out to dinner with friends and they send you their half of the money so you don't have to wait on a split check, people are doing this all kinds of personal uses as well. 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. So from any personal transactions in doing this, that will help us when we come 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. Now typically they will ask you if this is for goods or services or for personal. When you make the payment, make sure you put a little 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 was that one for? Or you have a good audit trail to prove it. If the IRS ever came to ask you what those funds transfers were for, many people are using these pretty free form and they're going to 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. 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. 1099ks will be coming around this year. I'm Donna Bordeaux from campgroundaccounting.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 donnaampgroundaccounting.com ra.
