New tax code rules in 2022


EYEWITNESS NEWS (WBRE / WYOU) – There is a big change in the tax code on January 1st and if you have a side business for extra money you better be careful.

It has to do with how much money you can make without Uncle Sam getting a coin. This amount is about to get much smaller.

We’ve seen a lot of people fend for themselves and start small businesses to earn extra money or keep them afloat during the pandemic. But whether you’ve opened an Etsy store, DJ at weddings, or do some hands-on work and accept payments through PayPal, Venmo, or Cash App, you’ll need to account for that income on your tax return.

Starting Jan. 1, the US bailout will require third-party apps like Venmo and PayPal to report business transactions for the sale of goods or services over $ 600. In the past, these transactions were only reported if they were over $ 20,000.

“The threshold for reporting third-party transactions has been lowered to $ 600. This is for someone who is either in a commercial enterprise or who trades goods in the hope of making a profit, ”said Bill Lazor, director of Kronick Kalada Berdy & Co.

What does this mean for local business owners? Spencer Rappaport is the Principal Engineer and owner of Evolutionary Computers in Kingston. He takes care of everything from cell phone and laptop repairs to IT services for other businesses.

Like many small business owners, Rappaport accepts payments through PayPal, Venmo, and Cash App. He sees this change hurting small businesses in the long run.

“You have to tax this, so you have to tax your customers if you get paid by it. There is really no benefit to this. It’s a prejudice in a way, ”Rappaport said.

Rappaport says it will make it harder for people to start their businesses.

“It’s going to destroy the concert workers, the secondary workers, the people who are just trying to make a few bucks. It’s going to make there more taxes than there are profits, so it’s going to destroy small businesses or anyone starting out, ”Rappaport said.

Lazor says this only strengthens existing rules to help close the tax gap.

“This is really going to affect small sellers, small businesses to make sure that their income that they report on their tax return matches payments processed by a third party payment organization,” Lazor said.

Lazor says business owners need to be vigilant when it comes to tracking transactions and expenses. It is estimated that this change will generate billions in new taxes over the next 10 years, as making money “under the table” may soon be a thing of the past.

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