Good article from Cnet explaining the confusion over the new IRS reporting law for payments over $600 made through payment apps like Venmo, PayPal, Zelle etc. Tax advisors recommend employers of nannies, housekeepers, companions and other domestics paying salaries through a payment app should do so through a separate business account so the payments are clear and easier to tie into their nanny’s or housekeeper’s W-2. You should consult your own tax or legal advisor to avoid any missteps.
“Going forward, third-party payment companies will issue you a 1099-K tax form each year if you earn $600 or more annually in income for goods or services. This tax form might include taxable and nontaxable transactions, particularly if the account is for both business and personal use.
The IRS will also receive a copy of the tax form and won’t be relying purely on self-reporting. “The IRS will be able to cross-reference both our report and yours,” PayPal noted in a November 2021 press release.
To make managing your business finances easier, we recommend creating separate PayPal, Zelle, Cash App or Venmo accounts just for your professional finances.”Continue article here.
Posted by Wee Care Nanny Agency