Latest news with #Form1099-K
Newsweek
3 days ago
- Business
- Newsweek
IRS Issues Reminder of June Tax Deadline for Millions: What To Know
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The Internal Revenue Service has reminded quarterly taxpayers that their second deadline of the year is approaching on Monday, June 16. Why It Matters Most employees pay their taxes on the annual deadline every April, but freelancers, small business owners and anyone else earning money that hasn't been subject to federal withholdings may have to submit quarterly payments four times a year. Filing and paying your taxes on time means you can avoid penalties. What To Know Federal taxpayers who earn income not subject to withholding—such as self-employment earnings, gig work, interest, dividends, capital gains, rental income, or 1099 payments—may need to make estimated tax payments during the year, the IRS says. Taxpayers—including sole proprietors, partners, and S corporation shareholders—who expect to owe at least $1,000 in taxes for the year are generally required to make estimated tax payments. Corporations must do the same if they anticipate a tax liability of $500 or more. Individual taxpayers earning money through gig work, freelance services, or the sale of goods may also need to pay estimated taxes, even if they receive a Form 1099-K. This includes those who also work regular jobs and have their income taxes removed via W-2 throughout the year by their employer. Internal Revenue Service sign at the IRS Building in Washington, DC, on March 14, 2018. Internal Revenue Service sign at the IRS Building in Washington, DC, on March 14, 2018. GETTY Form 1099-K reports of payments received for goods or services through payment cards (like credit, debit, or gift cards) and third-party platforms, such as payment apps or online marketplaces. To figure out your federal quarterly estimated tax payments, you'll need to estimate your adjusted gross income, taxable income, deductions, credits, and total taxes for the 2025 calendar year. If your income drops or increases throughout the year, you can adjust your quarterly payments as you go. Form 1040-ES includes an Estimated Tax Worksheet to guide you through the calculation. The June 16 deadline applies for income earned between April 1 and May 31st. How To Pay Quarterly Taxes Electronic payment is the fastest, safest, and most convenient way to pay, the IRS says. Taxpayers have several options, including: IRS Online Account or Direct Pay – Pay directly from a checking or savings account, or use a credit/debit card or digital wallet. Payment processors may charge a fee for card payments. – Pay directly from a checking or savings account, or use a credit/debit card or digital wallet. Payment processors may charge a fee for card payments. Electronic Federal Tax Payment System (EFTPS) – A secure federal payment system for individuals and businesses. – A secure federal payment system for individuals and businesses. Check or Money Order – Made payable to "United States Treasury" and submitted with Form 1040-ES. – Made payable to "United States Treasury" and submitted with Form 1040-ES. IRS2Go App – The official mobile app of the IRS for secure payments and resources. Further Payment Deadlines There are two further payment dates for 2025 taxes this year. The next is on September 15, 2025, for taxes payable for June 1 to August 31,and the final is on January 15, 2026 for income earned between September 1 to December 31.
Yahoo
30-05-2025
- Business
- Yahoo
AICPA opposes limitations on tax deductions
The American Institute of CPAs (AICPA) has reiterated its stance against the proposed limitations on state and local tax (SALT) deductions for specified service trades or businesses (SSTBs) in the One Big Beautiful Bill Act. The body sent a second letter to the Senate Finance and House Ways & Means Committees highlighting the need for modifications to the 'troubling' tax proposals. In the letter, the AICPA said: 'We are sensitive to the challenges in drafting a budget reconciliation bill that permanently extends tax provisions, enhances tax administrability, and balances the interests of individual and business taxpayers. 'While we support portions of the legislation, we do have significant concerns regarding several provisions in the bill, including one which threatens to severely limit the deductibility of SALT by certain businesses. This outcome is contrary to the intentions of the One Big Beautiful Bill Act, which is to strengthen small businesses and enhance small business relief.' The AICPA called for an allowance for business entities, including SSTBs, to deduct SALT paid or accrued in trade or business activities. This move aligns with the Tax Cuts & Jobs Act's original intent and has been sanctioned by the Internal Revenue Service. The current House version of the bill is criticised for unfairly targeting SSTBs by restricting their SALT deduction capabilities. The AICPA also addressed the risks of contingent fee arrangements in tax preparation, suggesting they could lead to abuse. They recommended removing an amendment that could permanently disallow business losses without offsetting business income. The letter warned against laws that financially harm businesses and discourage professional service-based business formation. The AICPA supported provisions in the bill, such as using section 529 plan funds for credential expenses, tax relief for natural disaster-affected individuals and businesses, and making the qualified business income deduction permanent. They also advocated for the preservation of the cash method of accounting and increasing the Form 1099-K reporting threshold. In addition, the AICPA endorsed permanent extensions of international tax rates and provisions that offer greater certainty and clarity. It also shared a list of endorsed legislation, principles of good tax policy, and a compendium of proposals for simplifying and technically amending the Internal Revenue Code. AICPA Tax Policy & Advocacy vice-president Melanie Lauridsen said: 'While we are grateful to Congress for many provisions in this bill, the unfair targeting of certain types of businesses creates inefficiencies in business decision-making and could result in negative, long-lasting impacts on the economy. 'We hope that Congress will consider our recommendations and make the necessary changes that will create parity between all businesses.' Earlier in May 2025, the AICPA submitted comments to the US Department of the Treasury and the Internal Revenue Service on proposed regulations concerning previously taxed earnings and profits and related basis adjustments. "AICPA opposes limitations on tax deductions" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Axios
15-04-2025
- Business
- Axios
What to know about Venmo, PayPal and crypto payments on Tax Day
The deadline to file federal income tax returns and extensions to the Internal Revenue Service is Tuesday for most of the United States. Why it matters: Payments on platforms like Venmo and Paypal, as well as crypto assets, have specific reporting rules. Do I need to report crypto transactions on my taxes? The big picture: Yes, taxpayers need to report crypto and other digital asset transactions on their tax returns. "Anyone who sold crypto, received it as payment or had other digital asset transactions needs to accurately report it on their tax return," the IRS says on its website. Digital assets include convertible virtual currency and cryptocurrency, stablecoins and non-fungible tokens (NFTs). Even though "currency" is in the name, crypto and other digital assets are property in the eyes of the IRS, and general property tax rules apply to their transactions. More detailed information about digital asset transaction reporting can be found on the IRS website. Do I need to report Venmo and Paypal payments? State of play: Yes, those earning at least $5,000 through platforms such as Venmo and Paypal will need to report their payments to the IRS. Previously, self-employed workers making at least $20,000 through Venmo, Paypal, CashApp, Stripe and other payment apps received a 1099-K to report income. The IRS is starting to transition to lowering that threshold to $600, which will begin in tax year 2026. For 2024, the minimum is $5,000. People earning that much through app payments should receive and fill out a Form 1099-K. What other platforms do the new 1099-K rules apply to?
Yahoo
13-04-2025
- Business
- Yahoo
Zelle tax reporting: Here's what to include on your return
You may have heard some buzz in previous tax seasons that peer-to-peer payment apps like PayPal, Venmo, and Cash App were required to report business transactions above certain thresholds to the IRS. Are digital payments made through Zelle subject to the same reporting requirements? The short answer is no. Unlike third-party payment processors, the Zelle network does not issue a Form 1099-K for the purposes of tax reporting. However taxpayers should know that business income received through Zelle still needs to be included on your federal tax return. Let's dive deeper into what makes Zelle different and what small businesses, freelancers, and self-employed workers need to know about declaring taxable income from Zelle on this year's income tax filing. Instead of thinking of Zelle as a payment services provider, consider it a part of the payment networks between participating banks and their customers. Through the bank's website or mobile app, Zelle allows users to make both business and personal transactions between different financial institutions. The critical distinction between payment platforms like Venmo or PayPal and Zelle is that Zelle transfers money directly between users' bank accounts. The other platforms function more like a digital wallet, allowing users to keep money on the platform and providing buyer protection or disputed transaction resolution services. These differences make Zelle exempt from the IRS reporting requirements for third-party payment apps. However, money received on Zelle as payment for goods and services is still subject to tax reporting rules. Read more: What is Zelle and is it safe to use? As previously stated, whether the payments are personal or professional, Zelle doesn't report your transactions to the IRS. That means even if transactions in your business account meet the new tax reporting threshold, you won't receive a 1099-K form for the tax year and neither will the IRS. But it's important to stress, especially for business owners, that the absence of a tax form doesn't mean you don't have tax liability for money transferred with Zelle. If you received payments for goods and services through the network and you're not sure if you should include those transactions in your federal tax filing this year, consult a tax professional. Even though Zelle doesn't issue you a form detailing tax information for your federal or state filing, that doesn't mean you can skip reporting the income. Personal payments between friends and family, like reimbursement for a shared restaurant bill, are not considered taxable, but any money you received in either your business or personal account for providing goods and services needs to be reported to the IRS. Keep careful and accurate records and report business payments you receive as a sole proprietor, self-employed contractor, or freelancer in Schedule C of Form 1040 for 'Profits and Loss from a Business.' If you're not sure how to correctly report this income, consult a certified public accountant (CPA). Read more: 7 ways to do taxes online for free Zelle's exempt status from IRS reporting rules does raise some eyebrows and some confusion for the average taxpayer. But keep in mind that if a client pays you through Zelle for goods or services you provide as a self-employed individual, you should also receive a 1099-NEC if those payments exceed $600. In contrast, other third-party payment platforms like Venmo, PayPal, and Cash App must disclose business transactions of $5,000 or greater to the IRS for the 2024 tax year. In 2025, that reporting threshold will lower to $2,500, and by 2026, business transactions totaling $600 or more will prompt payment apps to issue a 1099-K form. Read more: Do you have to pay taxes on Cash App transactions? Here's what the IRS says. No. Because of how the network transfers money, Zelle is exempt from tax reporting rules that apply to other payment apps. However money received through Zelle for the payment of goods and services is still considered taxable income and should be included on your federal tax filing under Schedule C of your 1040 Form. Zelle isn't shutting down, but its standalone mobile app is being sunsetted and is no longer available. The company says only a small fraction of transactions were initiated on the mobile app, so it's pivoting to support Zelle through its network of banks and credit unions. This should help eliminate some confusion about Zelle serving as a third-party payment service and avoid implications that it shares the same tax reporting responsibilities.
Yahoo
11-04-2025
- Business
- Yahoo
How do PayPal taxes work? Here's what you need to know about reporting to the IRS.
If you have a PayPal account, you may wonder whether you need to report money you've received on your tax return. Recent changes in federal tax reporting requirements for payment apps like PayPal, Venmo, and Cash app have caused some confusion among taxpayers. Here's what you need to know about the reporting thresholds for taxable income received through PayPal and which tax form you can expect to receive if you made business transactions on the platform during the last tax year. We'll also cover whether you need to pay taxes on all the money you received through PayPal and how this tax rule applies to small businesses, freelancers, and self-employed contractors. The short answer is if you received payment for goods or services through PayPal, that money could be subject to income tax by the Internal Revenue Service (IRS). But money sent between friends and family is not. Here's a breakdown: When business owners or self-employed individuals accept any payment for goods and services via a credit card, debit card, payment app, or even cryptocurrency, it's considered business income. You're responsible for correctly reporting it, but you aren't the only one reporting to the IRS. If you conduct a certain amount in business transactions during the calendar year, PayPal and other payment apps are required by tax laws to provide your tax information both to you and directly to the IRS by completing a Form 1099-K. There are two exceptions to this rule. The first is if someone sent you money flagged as 'payment for goods and services' into your personal account. The second exception is if you sold a personal item for a profit, in which case the profits are subject to tax. An example is hobbyists who flip furniture as a side hustle. If you bought an old cabinet for $40 and then put in some supplies and elbow grease to flip it for $220, the difference would be considered income. The good news is the supplies you used and the cost of the cabinet can be considered a business expense. If you use PayPal to send money to pay your share of expenses with a roommate or repay your mom for a purchase, those transactions aren't subject to income taxes. PayPal calls them 'Friends and Family payments,' and they aren't reported to the IRS and don't go toward meeting the reporting threshold for third-party payment apps. Here are a few scenarios to help you determine which types of payments fall under IRS rules for income reporting and which ones are exempt. Examples of business transactions: Receiving payment for cleaning, food prep, or other professional services Being paid for handmade jewelry or crafts Flipping furniture and selling it for a profit Earning money for mowing lawns or pet care Getting money for providing transportation or delivering meals Examples of personal transactions: Receiving money for a dinner check you split with friends or family Selling your used couch for less than you paid for it Receiving money from your roommate to cover the groceries Your spouse sending money for half the month's utilities Getting money to cover the cost of gas or a hotel for a group trip Read more: 18 small business tax deductions worth knowing The IRS, which required third-party apps to report business transactions over $20,000 during the 2023 tax season, is gradually phasing in a lower $600 transaction threshold that was passed as part of the 2021 American Rescue Act. That means for the 2024 tax year, PayPal and other payment apps are required to do 1099-K reporting if your business transactions totaled $5,000 or more. During the 2025 tax year, that threshold will drop to $2,500 and by 2026, a $600 threshold will apply for ta x reporting purposes. Read more: Do you have to pay taxes on Cash App transactions? Here's what the IRS says. If the total payments to your Paypal business account meets the reporting threshold, PayPal will provide 1099-K forms in the mail, email or available for download that you can include with your tax filing. You may also receive one of these tax documents if you have a personal account that met the reporting threshold for transactions flagged as goods and services payments. To ensure you receive an accurate 1099-K form, PayPal suggests you keep your business and personal account information updated with your correct address and social security or tax identification number (TIN). Keep in mind you may still need to make tax payments on Paypal income even if you don't receive a Form 1099-K, especially in states that have lower reporting threshold such as Maryland, Massachusetts, Vermont, Virginia, and Illinois. Read more: What is taxable income (and how can you reduce it)? If you didn't receive a 1099-K form, it may be available for digital download on the PayPal website. Log into your PayPal account, select 'activity' from the menu and choose 'tax documents' under the reports section. The IRS says you shouldn't miss the deadline to file your taxes if you didn't receive a Form 1099-K or if you believe the one you received is inaccurate. You can request an updated document, and in the meantime, report the amount from your incorrect Form 1099-K in the entry space at the top of Schedule 1 (Form 1040), 'Additional Income and Adjustments to Income.' If you received a Form 1099-K but didn't have any business income, you can put 'Form 1099-K received in error' on your Schedule 1 Form 1040 either on Part I, Line 8z under 'Other Income' or on Part II, Line 24z under 'Other Adjustments.' Yes, all third-party payment apps such as PayPal, Venmo, or Cash app are generally subject to the same tax rules and reporting thresholds. So whether you're a sole proprietor or a bustling small business, if you have a business account that accepts payments on one of these payment processors, expect to receive a 1099-K form if you made more than $5,000 in 2024. Previously there had been some confusion about whether Zelle was subject to these rules, but they've since sunsetted their mobile app to resolve any uncertainty. Zelle simply transfers money between banks or credit unions and isn't a peer-to-peer payment system. Freelancers or self-employed taxpayers who received income on Zelle should report that income on Schedule C of their federal tax returns. Not sure if you should report payments you received on PayPal as income on your federal tax return? Consult with a tax professional to receive accurate tax advice for your situation. Personal payments between family and friends aren't taxable and don't count as income. However, business payments for goods and services made into your PayPal business or personal account are considered taxable income and will be reported to the IRS once the transaction threshold for the tax year has been met. Some states have lower reporting thresholds than the current IRS tax rules. This includes Maryland, Massachusetts, Vermont, and Virginia which require third-party payment platforms to send a 1099-K form for any number of business transactions totaling $600 or more. Illinois has slightly different thresholds which must be met including $1,000 in payments for goods and services and four or more separate transactions.
