IRS Taxing Venmo, Paypal, Cash App PaymentsJan 25, 2022
Beginning in 2022, Third Party Payment Processors (TPPP) will be required to report any payments for goods and services in excess of $600 to the IRS. Thanks to a hidden provision passed in the American Rescue Act Plan, the previous threshold of $20,000 is going to be drastically reduced to match the 1099 income threshold of $600.
What this means for martial arts schools is that if you paid any Instructor for seminars, private lessons, teaching, or for instructional DVD sales, they will receive a from the TPPP and must report these wages to the IRS. The IRS will have already been notified of the income and will come knocking on your door if you fail to report it.
The $600 threshold does not apply for reimbursements say for example, somebody is sending you money for their half of a dinner. However, it is the responsibility of the sender to mark the transfer as a reimbursement and not a payment for goods and services. What if they forget? Well that's going to be your responsibility to prove that to the IRS. What a headache!
The good news is that we are working on Martial Arts Business Instructional that should help martial arts instructors and coaches deal with this issue and much to the chagrin of the IRS, thrive!
Be on the lookout for the:
This will be a tax saving and wealth building resource for your Contracted Coaches and pretty much anyone that is considered an Independent Contractor.
I fear that our taxes will most likely become increasingly more confusing and burdensome in the coming months and years.
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