New TAX Rule coming in 2022 for Small Business
Hope you had a wonderful New Years with family and friends, and you are ready to put up your sleeves and start with energy in 2022. There is a change for 2022 for all those solopreneurs, independent contractors, small businesses who get paid via Paypal, Venmo, Zelle, Amazon, Etsy and many other applications.
These platforms collect on your behalf credit cards of your clients for the products or services you provide and deposit it to your bank account, and it’s been up to you to report this income, not anymore. The IRS is now requiring these platforms to report if you made over $600 in a year. It doesn’t matter if it was several clients or one at a time the amount of $600 is the benchmark for the IRS to ask for the report.
No matter which platform you use you will receive a 1099-K after January 31st, 2023, with the amount of money you have received. You might have a question, what if it’s a friend sending me money, the system will have to ask what the money’s for. In the case of independent contractors who work for a business and are paid through digital platforms, there will be an overlapping of 1099s. The business will issue a 1099-MISC and from the paying platform a 1099-K, you will need to disregard the 1099-K if there are no other amounts.
You will need to update your digital platform and we are here to help you. We can provide you with an EIN if needed, contact us for an appointment. All the platforms are requesting it and you will need it to continue business with them for example Paypal.
Ruth Garcia-Corrales
NEW-WBC, Program Director
