Ref: American Rescue Plan
Under the American Rescue Plan, all payment facilitators such as Venmo, Paypal, Zelle, etc will have to send recipients a Form 1099-K if the total received in 2022 was $600 or more. The recipient will have to list that income on his/her tax return for 2022 and tell the IRS what the money was for?
Example: Joe Doe receives a Form 1099-K for $9,000 for 2022. His records show that $4,000 was for room rental in his home; $1,000 for sale of a bicycle (cost $2,500) and $4,000 inheritance.
Result:
- Rent income: Will be shown (and taxed on Schedule E of his return)
- Sale of bicycle: Will be shown on Schedule D and the $1,500 personal loss non-deductible
- Inheritance: Will be shown as non-taxable income under “other income” on his return.
KEEP VERY GOOD RECORDS AND SUBMIT ALONG WITH THE FORM 1099-K.
