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Will I have to pay taxes when sending and receiving money on PayPal - what exactly is changing?
Beginning January 1, 2022, the Internal Revenue Service (IRS) implemented new reporting requirements for payments received for goods and services, which will lower the reporting threshold to $600 USD for the 2022 tax season, from 2021’s threshold of $20,000 USD and 200 transactions. Here’s some more detail:
1099-K Threshold Change:
This new Threshold Change is only for payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal for dinner, gifts, shared trips, etc.
This change was introduced in the American Rescue Plan Act of 2021, which amended some sections of the Internal Revenue Code to require Third-Party Settlement Organizations (TPSOs), like PayPal, to report goods and services transactions made by customers with $600 USD or more in annual gross sales on 1099-K forms. Currently, a 1099-K is only required when a user receives more than $20,000 USD in goods and services transactions and more than 200 goods and services transactions in a calendar year.