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New IRS rules for cash app transactions take effect in 2022

Starting January 1, 2022 cash app business transactions of more than $600 will need to be reported to the IRS.

GREENSBORO, N.C. — Cash apps like Venmo, Zelle, and PayPal make paying for certain expenses a breeze, but a new IRS rule will require some folks to report cash app transactions to the feds.

Starting January 1, 2022, cash app business transactions of more than $600 will need to be reported to the IRS.

Before the new rule, business transactions were only reported if they were more than $20,000 dollars.

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CPA Kimberly Morrow of Taylor's Pro Tax & Beyond in Greensboro said this change doesn’t apply to personal expenses like paying for dinner or sending money to friends and family.

Morrow said the rule is meant to crack down on self-employed workers who receive income through the apps.

“So basically, people that are like hairstylist or you have like entertainment, or you’re earning income from cash app, basically if you make over $600 you’re going to start having to pay taxes on that money,” she explained.

“Most of the time, the income that you do report from the cash app, should already be on your tax return when you do claim your self-employment," Morrow said. 

Morrow said this can be complicated for self-employed workers who use cash apps for both personal and business transactions.

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She recommends working with a professional bookkeeper to keep track of transactions that are taxable from those that are not.

“Most people don’t want to keep up with receipts and plus, receipts fade over time,” Morrow said.

“Then when all these electronic transactions come in, it doesn’t have a category and when you’re about to do your taxes then you have a lot that you have to separate when it’s time to do your taxes so it can be a headache," she said.