New IRS Rules Could Affect Venmo, Zelle and CashApp Users (nytimes.com) 183
Users of digital wallets and e-commerce platforms must start reporting small transactions, sowing fears among small-business owners. From a report: A tweak to the tax code enacted last year was intended to ensure that those who use services such as Venmo, CashApp, Etsy, StubHub and Airbnb to collect money are reporting all their income to the I.R.S. The change was part of the Biden administration's efforts to narrow the $7 trillion "tax gap" between revenue that is owed but not collected. But for millions of Americans, the new requirement means they will be faced with additional tax forms, potentially higher tax bills and a lot of confusion. That is stirring anxiety among some of the middle-class taxpayers and independent business owners President Biden promised would spared from greater tax scrutiny.
The new tax policy was tucked into the stimulus package known as the American Rescue Plan that Democrats passed in 2021. It has gone largely unnoticed because it applies to income earned this year and affects taxes that most Americans will pay in 2023. It is projected to raise about $8 billion in additional tax revenue over a decade. But as the impact of the rule and the prospect of surprise tax bills becomes clear, it is drawing pushback from business groups, lawmakers and others, prompting a scramble within the Biden administration to come up with a solution to avoid another chaotic tax season next year.
The new tax policy was tucked into the stimulus package known as the American Rescue Plan that Democrats passed in 2021. It has gone largely unnoticed because it applies to income earned this year and affects taxes that most Americans will pay in 2023. It is projected to raise about $8 billion in additional tax revenue over a decade. But as the impact of the rule and the prospect of surprise tax bills becomes clear, it is drawing pushback from business groups, lawmakers and others, prompting a scramble within the Biden administration to come up with a solution to avoid another chaotic tax season next year.
"Unnoticed" (Score:5, Insightful)
No, it was "unreported" not "unnoticed". You should be asking yourself why the news media of the time didn't think it important enough to make a bigger deal of.
But sure; they're only going after the "top 1%". I hope at least some of you have learned from this; if the gov feels empowered to go after the private wealth of one person, it'll go after the private wealth of all.
Collection is Coming (Score:3, Interesting)
But sure; they're only going after the "top 1%".
Indeed, the reason they need 87,000 new IRS agents is just to go after those 1% even more.... not go after a notion of Venmo users... oh wait!
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I thought law enforcement and being tough on crime made conservative peepees hard? The IRS was under staffed and under budget for years and rich people could afford to fight back.
Re: Why do you hate the poor? (Score:2)
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From the article:
"Whether it's splitting the bill for dinner, chipping in for a gift or just sending money to a loved one, PayPal and Venmo payments between two consumer accounts default as a Friends and Family transaction -- ensuring they are not taxable or reportable to the I.R.S.," said Tom Hunter, a PayPal spokesman.
And "file paperwork"? Does Venmo not have a line to enter for a description of the transaction? (I only use Zelle, so honestly don't know.) How hard is it to write "rent"? Your concern about itemizing the money and the landlord tells me you've never run a small business or been self-employed where you had to KEEP EVERY PAPER RECEIPT and frequently make notes on the back of them. Going electronic makes this a BREEZE and if you can't do that with Venmo, you need to pick another app.
And the de
Re: Why do you hate the poor? (Score:2)
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I think electronic version of what used to be a manual process is the easy button. And the whole "87,000 agents" is click-bait and grossly misleading [marcumllp.com]. In 2021 less than 1% of individual income tax returns reporting annual income between $25,000 and $500,000 were examined. In 2020 there were 164,000,000 million returns filed [ntu.org] with the IRS. Assuming the crazy, bullshit number of 87,000 new agents assigned to auditing, that's one agent per 1,886 people. (And that 87,000 number is over the next DECADE according
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Well, I'm guessing you're using one in your head instead of the one gov't and economists use [hhs.gov].
Then there's the fact that U.S. income tax brackets are marginal, and at around the poverty level you'd be paying at most 12% [intuit.com].
So that means your example of some guy making $700 whittling carvings would MAYBE have to pay $70 assuming that he had zero other deductions and an otherwise regular income of more than the standard deduction.
Re: Why do you hate the poor? (Score:2)
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What are they paying you with? If Venmo, the roommate won't be marking it as "goods and services" and it won't trigger the threshold.
Even if you trigger a threshold, it just means a 1099-K is issued. You can literally do nothing with it - just file your taxes as normal and ignore it. You do NOT have to file a Schedule C or pay a tax preparer for this, even if a 1099-K is issued.
Re: Why do you hate the poor? (Score:2)
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in Theory, collect money and just tell people to not mark it as anything taxable. Brilliant. Thats no where near how the government works
That's how the new 1099-K filing rules for payment processors work, though. Whatever else you're dribbling on about isn't really relevant.
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It's fine if you don't read the rest of the post, but don't reply as if you did.
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I'd rather be wrong than half illegible. You're typing so furiously now it's almost unreadable.
I was only referring to the bad wording in the linked article that said "Those thresholds were lowered to $600 for a single transaction" and did not go back to the original source to confirm the rules.
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87,000 agents over the next 10 years. Because apparently nobody at the IRS is allowed to retire or quit? Because there isn't increasing complexity to the tax code every single year, making every single review take more time? And there isn't even more tax returns being filed every year as unemployment goes down, and the working population goes up?
And that doesn't even say anything about the fact that in 2012 they already had that many annualized positions [irs.gov] according to their own data.
So basically you are w
Re:Collection is Coming (Score:5, Insightful)
Because there isn't increasing complexity to the tax code every single year, making every single review take more time?
I think this statement pretty much highlights the problem we have with our tax system, where you have to justify the hiring of 87,000 agents over the next 10 years just to do their job properly on the basis that tax rules are becoming increasingly complex every year. The solution to this problem isn't to throw more warm bodies at the problem and massively increase the operational costs of the IRS. The solution is to simplify the tax code.
Imagine if you had a piece of software running on your infrastructure that increases in complexity every year, demanding an ever increasing amount of system resources but not actually providing any added benefits or features. On what plane of existence is it logical to respond to this by simply throwing more servers at it? If the software is too complex, simplify it or throw it out and start over. In my line of work, I'd be fired on the spot for suggesting that the solution to a ponderous, inefficient piece of bloatware that consumes an ever increasing amount of resources is to just add more hardware.
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What's your source for the "87,000 new IRS agents" number, precisely?
Because it's not the IRS. It's the usual RWNJ [nytimes.com] that was amplified by Tucker Carlson and his ilk after assuming that every dollar of increased funding to the IRS was going to go to enforcement agents, rather than improving their ancient computer systems, putting staff on the IRS help lines, and hiring
Which way is cheating? (Score:3, Insightful)
What a surprise, you're here to defend tax cheats and other criminals.
Wow, who'd have thought a guy calling himself "narcc" would be a tool of the police state! What a twist!
Is a guy who gets by whittling sticks into figures and making $700 a year on Venmo REALLY someone who should be taxed? Why does the government need to know about every single penny that comes into the pockets of the poor? Because THAT is what this rule it about. It's not about trying to catch tax cheats as we think of them - it's ab
Re: Which way is cheating? (Score:2)
If he only makes $700, he's not going to owe any taxes. If he is head of household, he might even get the EIC and the government will pay him. Tax reporting can be onerous, but you can always hire an accountant if you find complying with the law difficult.
Re: Which way is cheating? (Score:2)
But the IRS can still fine him for not reporting income.
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Now show us where the IRS has ever done that. The IRS issues fines and penalties for people who actually owe money, no people so far below the standard deduction that there's no way they'll owe anything.
The IRS fines THOSE people for supposed EITC fraud if they cannot absolutely prove that they qualify under the increasingly complex rules. Yet you don't cry about that issue at all, do you.
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The pure economics of it all suggest there is no value in spending $500 in IRS agent time to try to recover $10 in unpaid taxes from a poor person.
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If the person is only making $700 dollars from selling whittling I doubt there would be any taxes to pay. They would still need to file their taxes though. They have always been required to report their income. There was a loop hole that you could use payment services to get around this and now they are closing that loop hole. The only loop hole left is to use cash and it will rather hard to close that hole.
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You'll run out of mod points before I run out of the ability to comment, big guy.
No. Which, of course, is why there's an earned income threshold and personal exemptions that would make the guy making $700 a year on Venmo have zero tax liability.
Now let's look at the guy making 100 $700 transactions per year. $70K is real money, especially when it's unreported and tax free.
Re: Collection is Coming (Score:2)
"Middle class" Sorry, but people who use the likes of thse services are most often lower class individuals. Which means this is most likely to screw over people and get them fired for not reporting income, even if they wouldn't otherwise have a tax bill if they had reported things correctly. Which was always the point.
Re: Collection is Coming (Score:2)
That should read fined, not fired.
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Does America really fine people for not filing? Here in Canada, there are only fines if you owe tax and don't file.
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He makes an argument that the new 87,000 IRS agents ostensibly hired to go after the 1% harder are now more likely to go after small fry Venmo users simply due to their number -- and for that you call him "disgusting"?
Strange that you would be so worked up over an argument. People react that way when some nerve is touched.
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It also makes you wonder why the IRS needed to buy $700K in ammunition [verifythis.com] this year...what/who do they think they're going to be shooting at?
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The order was for the IRS Criminal Investigation (IRS-CI) division, which is a federal law enforcement agency that conducts criminal investigations including tax violations, money laundering, cyber crimes, and organized crime involving drugs and gangs. There are more than 2,000 sworn special agents in the division.
Many of these cases are typically worked in conjunction with other state and federal law enforcement agencies. IRS-CI special agents have been carrying firearms throughout the more than 100-year history of the agency, and have found themselves dealing with some of the most dangerous criminals,” an IRS spokesperson told VERIFY.
And, if we're being honest, they probably only bought 100 rounds per agent for that price.
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So that's 350 bullets per agent, assuming they all have guns. I don't know hoe much annual target practice they must have, but I can see plowing through most of it.
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A citizen selling like $1K a year or so on Etsy, or having a garage sale, or something small, should not have to waste time trying to find and figure out how to fill out extra tax forms, etc....and pay tax for such a small amount of revenue.
If nothing else..
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You'll run out of mod points before I run out of the ability to comment, big guy.
Now all these payment services will 1099 it for you. Enter one row of information into TurboTax. Done.
BTW, the garage sale is untaxed income [intuit.com], unless your household goods are magically apprec
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Nobody is saying they aren't cheats. But when running, he said they were going after the big fish, and not instituting a picayune iron fist on the populace, who, you know, votes.
"Sure, not going after the little guys," he lied.
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Why don't we have both [knowyourmeme.com]?
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See why Trump wins?
He does?
Seems he has one win to talk about. After that, his party has gotten fucking killed in every election since 2016.
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You should be asking yourself why the news media of the time didn't think it important enough to make a bigger deal of.
Probably because the people affected already owe the money. This policy change just makes it more difficult for them to avoid declaring some of their income.
if the gov feels empowered to go after the private wealth of one person, it'll go after the private wealth of all.
If you're worried about the government going after private wealth, I feel like you should be more upset about civil asset forfeiture than a minor change in income reporting policy. If you're hoping to fight back against the concept of taxation, you're about five thousand years too late.
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I'm sure you've always reported every dollar of income you've ever received, yes? Surely you're not one of those criminals you were just criticizing?
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Yes, I do. It's not that hard.
Tax fraud is not normal. It's not something "everybody does". It's something criminals do.
Are you admitting to tax fraud? Because this certainly looks like you're admitting to tax fraud.
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Except for paying sales tax on out-of-state online purchases. But only because nobody has time for that. It's why I have no problem with the new rules for online marketplaces to collect and remit sales tax on behalf of sellers (think Amazon/eBay).
Re:"Unnoticed" (Score:5, Informative)
Well, since I make my income as a W-2 employee, and my investment accounts for some reason insist upon issuing 1099s, yes, yes I have.
Those turning a profit by buying and selling goods and services in private transactions are getting really, really upset that they have to live in the same reporting world as the rest of us. Boo hoo.
There already was a longstanding requirement to report transactions about $600 to the IRS for tax tracking purposes. The only thing that has changed is that now financial services networks will be reporting those transactions even if you do not. So that you cannot underreport your business income. Again, boo hoo.
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How? Because I live in reality, not a crazy right wing fever dream.
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Lol, only in today's day and age can one who expresses cynicism towards the government be called "crazy right wing".
20 years ago I was a liberal for the exact same behavior.
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Yeah, it's like the anti-war left disappeared once Obama was elected, we were still in Iraq and Afghanistan, but they stopped caring, funny that.
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Skepticism about government does not define whether you are left/right crazy.
Its what you justify using the skepticism. Skepticism justifying draft dodging, would be left. Dodging taxes would be rightwing nut.
You had always been a right wing nut.
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From the bill....
Customs and Border Protection (CBP) – $16.464 billion is provided in base discretionary funding for CBP, as well as $1.563 billion to address increased encounters at the Southwest Border. In total, $7.153 billion is provided for the U.S. Border Patrol for operations, hiring, and Southwest Border surge requirements, which is a 17 percent increase above FY22. In addition, $230 million is provided for between-the-ports technology such as autonomous surveillance towers, and an overall amo
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It's no wonder you post as AC... The top 1% control have the wealth. Get a clue.
FU NYT, and your paywall (Score:2)
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I agree FU NYT/paywall... Thanks for the link!
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Cash - Never forget. (Score:2, Insightful)
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Now that the vast majority of transactions are electronic, the IRS is happy to tax that old jacket you bought at your neighbor's garage sale, etc.
You'd have to have earned a profit selling the old jacket to incur any tax liability. In a garage sale transaction that's not going to not happen.
But if your roommate is paying you via Zelle and you're writing the check to the landlord, get ready for a whole lot or paperwork and probably an audit.
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Re: Cash - Never forget. (Score:2)
You CAN write off all the other losses. But unless you pay a mortgage or run a business the itemized deductions rarely exceed the standard deduction.
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Complete bullshit.
Do you have even the tiniest idea of how the reporting works for that? Because it's very obvious to those of us that do that you don't.
Re: Cash - Never forget. (Score:2)
I do. And you need a cost basis for every item sold. If any sell above this basis, you need to file it as gains.
The reality is our tax code is too complicated and onerous for even the average citizen to follow. It gets worse with more money and complicated financial instruments.
Re:Cash - Never forget. (Score:4, Informative)
Technically Zelle has already stated they aren't covered by the rule and won't be issuing 1099-K forms. They facilitate ACH transactions P2P between the sender and receiver's bank and don't hold the funds at any point, so it's technically not a 3rd party transaction in the first place.
If your roommate is reimbursing you through Venmo and doesn't mark the transaction as "Goods and Services" then it also doesn't trigger the threshold.
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The is the next step in that process. The cashless economy. Which still needs to have tax paid. No one keeps track of cash transactions. It is only when the income does not support the outflows does anyone become suspicious. Like taking
come down on the fake 1099'ser employers (Score:3)
come down on the fake 1099'ser employers not the workers.
Already required? (Score:2)
Why is this needed. You are *already* required to report income. It doesn't matter if it's bank transfer, venmo, cash or carrier pigeon.
If the government thinks someone is cheating, thaton the government to prove, just like any other crime.
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This is nonsense fearmongering. If you sell a sofa for "fair market value" then you need to report that income. The IRS is fully aware, even if you're not, of the difference between profits and revenues. If you took a loss on that sofa, that will be reflected in your filing.
So, are you lying because you're a tax cheat or are you just incompetent?
Re:Already required? (Score:5, Insightful)
Wait..so you're saying, I'm supposed to keep a receipt/record of every purchase I make...so, that in a few years from now, if I happen to sell it, I can figure if I took a profit or loss on it?
I have no fucking idea how much I paid for my couch and if I sold it, I'd assume it was less than I paid, but I have earthly idea.
Piddly shit like this is not something that should be tracked or bothered with...
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Piddly shit like this is not something that will be acted upon, because nobody is buying $1000 "collectable" sofas that have increased in value.
Your "the IRS is going to assume that I got this for free but sold it for a profit" argument is the most hysterical bullshit ever. And it's trivial to resea
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It must be nice to be so well off that you have no idea what you paid for your couch. I'll just assume that it cost you $100000 then.
If you can't remember the exact price that is fine. If you can't remember a rough ballpark figure of what it cost then I guess you are in the wealth bracket where the extra $10 the sale of the couch MAY increase your taxes really isn't that much of a hardship for you.
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Because creating extra filing requirements for a transaction at a net loss helps the government make even more money! Right?
Right?
. . .
Re: Already required? (Score:2)
The IRS is NOT going to audit you because of one sofa sold on Venmo.
But they would really like to know if you are actually selling 6 sofas a month on Venmo and another 3 on Square.
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This. I'm surprised they went out of their way to bother all the little people rather than auditing some 1%ers, they collectively have nearly as much wealth as everyone else combined in relatively few hands that are easy to target, and they're vastly more likely to be cheating on their taxes with all that money. They do hide their tax-dodging in ways that's harder to untangle (double Irish sandwiches and such), but it still offers a much easier payoff for a given amount of effort from the IRS, and a given a
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I think it's probably because there are a lot of 1%ers who don't show up that way on paper. Hide enough revenue and you don't have a target on your back in the first place.
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It's needed because there are a lot of scumbag "entrepreneurs" who don't think that they need to play by the same rules that everyone else does.
This change means they can't cheat by failing to report their income.
Re: Already required? (Score:2)
Transferring money between friends isn't generally a taxable even. If you're not cheating on your taxes you don't have to worry about audits. The IRS is not out to fuck people. Except for tax cheats. And those people deserve getting fucked.
The more transparency over transactions with strangers the better. For everything else, like you said, there's cash.
Less than 1% (Score:3, Informative)
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A drop in the bucket. But hey extra paperwork so yay!
If you treat everyone like a business... (Score:2)
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Standard deductions and child tax credits already exist.
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You don't. Paypal might file a 1099-K, but you don't have to include it on your 1040 if it's not income.
re: The voters give it to them with 40 years of .. (Score:2)
This! 110%
There's no reason the vast majority of people in the House and Senate should have been re-elected, at all.
If nothing else, I look at those positions like I do the judges who get elected. The longer they're in office, the more opportunity they have to become corrupted by friends they make in "high places" or opportunities they discover to bend/break a few rules for personal gain. It's just human nature, and really has nothing to do with political affiliation so much as the simple idea that "power
"Goods and Services" (Score:2)
My understanding on this is that the $600 threshold is meant for those using the apps for business payments to avoid skipping out on their taxes.
I keep seeing Zelle show up in these articles, but according them them, they will not be sending out 1099-k's:
https://www.zellepay.com/faq/d... [zellepay.com]
Also, according to Venmo, it appears only if the transaction is tagged "Goods and Services" (which is by default on business profiles) will it be subject to this:
https://help.venmo.com/hc/en-u... [venmo.com]
If you're just selling a sofa
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If you're just selling a sofa (for more than $600 in a single transaction), go ahead and let them tag it as goods and services. You'll get a 1099-K but you still don't have to report it on your 1040, because it's a personal transaction at a loss. If you're running a business, I hope you have a separate Venmo account. And separate bank account.
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Yay extra paperwork for a transaction that doesn't trigger any tax liability at all. What a wise move on the part of Congress! Your government at work.
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It's a "paper" trail, nothing more. Technically the 1099-K is transmitted electronically to the federal government and it's likely that the payment processors will send an email link to download rather than mailing it.
Something that probably won't even get looked at outside of an audit.
The law has ALWAYS been $600 or more (Score:5, Insightful)
If it was cash, there just no way to track it so it was glossed over.
People treated Venmo/Paypal etc as cash for some pretty heavy traffic.
I know people doing AirBNB rentals via those services exclusively...
Let's look at that for a moment. $200/night; Let's just say 150 nights a year (It tends to be MUCH higher, but lets just say that)...
$30,000 a year with no tracking.
Yes, I read the article, at $20,000 they get paper work anyway before... Unless the payments are spread around to avoid the 20k threshold.
NO ONE would do THAT, right?
uh huh.
I worked 1099 for near to a decade. Got my 1099, filed my taxes, paid what I owed and kept records.
The small business man in the article has no issue really.
His quickbooks ARE his records just so quickbooks balances against the 1099K.
He has another issue if they don't
This is a FUD article by the 1% who don't wany to pay what they've been avoiding for a VERY long time and trying to rope the rest of us into being cannon fodder for their war against being taxed.
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As much as I dislike taxes, they are literally the only way the government gets funded. Road maintenance, social security, medicaid, the checks that keep your grandma from being homeless, the unemployment insurance you get if you lose your job, every single penny that funds our military, every bridge and dam that needs fixing, the army corp
Bottom line? The "tax gap" exists for a reason. (Score:2)
Attempt to close this "tax gap" will never do anything but further punish the lower to middle class population, because a big chunk of it is what was traditionally deemed "impractical to collect". People are used to concepts like being able to sell used goods in garage sales or via classified type ads (or their digital equivalents like Facebook marketplace) without getting taxed on those transactions.
It's never been legal, since the IRS says you're supposed to voluntarily report income of those types. But
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Obviously, if the potential income is only $8 billion over the next 10 years, that it isn't a great potential source of revenue for the Feds.
Many taxpayers are idiots. (Score:2)
> Many taxpayers who run small businesses, or occasionally sell goods on the side, often mix their business and personal transactions
I hope NYT is being hyperbolic here, but if many are mixing business and personal transactions -- that's all on them for violating one of the basics of business. Don't intermingle funds.
One of the things they ingrained into us, in Sr High School (in Canada), was "Never mix business and personal".
If you start a business or side gig -- keep it isolated, and keep track. Open
Flat taxes (Score:2)
I don't understand opposition to flat tax rates with no loopholes. Billionaires paying 0% will pay more with a 5% flat rate - a lot more!
of course .... (Score:2)
That is stirring anxiety among some of the middle-class taxpayers and independent business owners President Biden promised would spared from greater tax scrutiny.
he he he ... :'D
people who actually fell for this didn't realize that in about any country in the world, the total tax income from the middle-class is far, far greater than the total tax income from the rich. this is just basic math, the middle-class is where the real money is and where it makes sense to squeeze the most. this had to be the target all along. oh, and rich people are going to laugh their asses off ...
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It isn't about revenue. Tens of millions of people could be affected by this rules change, and yet it's not expected to generate more than $8 billion in additional revenue over the next ten years. That is chicken feed.
What it means is that if you transact with PayPal or Venmo or CashApp etc. then you can be harassed with audits.
A Modest Proposal (Score:3, Informative)
Concern trolling (Score:3)
It is shocking how the same right-wing crowd that is so concerned about the effect on the poor, the inconvenience of having to fill out forms, and how it's so unreasonable to have to even think about whether a transaction might be for for-profit business rather than unreportable garage sale of junk:
* demands that all voting require state-issued photo ID
* demands the end of on demand mail-in voting
* demands applications for tightly restricted absentee voting
* frequently demands same-day in person voting
You can really tell where the values lie when the downtrodden are held up as scarecrows against strong enforcement of tax laws but tossed aside when it comes to restricting participatory democracy.
Why is this a problem? (Score:3)
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Because it's mostly a tax on the poor and middle class. People are sending each other venmo for stuff on marketplace and craigslist because it's safer than carrying around hundreds or thousands of dollars in cash. Sales tax is regressive as it is.
It's a lot more cost effective to buy a few hundred dollar couch and not also be stuck with sales tax. It's been like this for hundreds of years actually. Person to person stuff that's private, shouldn't really be the governments concern. Until you become an ac