Did Biden Break His $400K Pledge? | New IRS Rule for Self Employed Freelancers & Gig Workers?
If you’ve dabbled in online selling or freelancing through platforms like PayPal, Venmo or Amazon, be warned – Uncle Sam is keeping a closer eye in 2023.
Starting this year, a new IRS rule goes into effect, requiring that third-party payment networks issue Form 1099-K, when a user receives more than $ 600 in gross sales from goods and services transacted in a single year.
This means that if you happen to be an American who made a little side income by selling things online or doing some freelance work – and you made more than $ 600, the IRS will now be putting you under scrutiny and forcing you to report that income as If it were an actual business venture, In fact, this change in the threshold from $ 20,000 down to $ 600 was buried in the pages of the so-called American Rescue Plan, which was the $ 1.9 trillion economic stimulus bill signed into law by Joe Biden in 2021.
While Joe Biden promised at the time that his new tax regime would not target anyone making over $ 400,000, it appears that in reality, working-class Americans will be the ones to bear the brunt of this new change.
IRS Tightens Regulations on Third-Party Payment Reporting For The Self Employed
If you’ve dabbled in online selling or freelancing through platforms like PayPal, Venmo or Amazon, be warned – Uncle Sam is keeping a closer eye in 2023.
That’s because the IRS recently lowered the reporting threshold for third-party payment networks from $20,000 in annual sales to just $600. Starting next year, these platforms will be required to issue Form 1099-K to any user receiving over that amount from goods or service transactions within a single tax year.
Previously, the higher $20,000 limit allowed casual sellers and side-hustlers to avoid a lot of tax paperwork. Selling a few used items on eBay or doing some freelance graphic design jobs through PayPal wouldn’t trigger reporting.
But now, even just a few hundred dollars in extra income could land consumers in the IRS’ sights and force them to declare those earnings. For many, it may mean shifting what was considered a hobby into a bona fide small business in the eyes of the tax authority.
However, the IRS has since put its plan on temporary hold while feedback is gathered. In a surprise announcement, they stated the lower threshold will not take effect in 2023. This provides welcome breathing room for casual sellers and freelancers.
Whether the new regulations ultimately go into place remains to be seen. But it’s clear the IRS aims to cast a wider net as the sharing economy and gig work become more pervasive. Time will tell just how tight they chose to ratchet up enforcement.
“Fact Check: Did Biden Break His $400K Pledge? The Surprising Americans Now Facing Higher Taxes Under New IRS Rules”
