From Financial Planning, by Lynnley Browning
A new law that requires cash apps and online marketplaces including Venmo and eBay to send tax documents to millions of Americans is ensnaring a surprising demographic: the wealthy.
Under the rule, e-commerce and digital payment platforms that transfer money from a buyer of goods or services to a seller must issue the recipient a Form 1099-K if they receive $600 or more in a calendar year. The Internal Revenue Service will also get a copy of the form, which details who got paid and through which third-party service. Lawmakers severely shrank the previous reportable threshold — $20,000 earned through at least 200 transactions — last year as part of the $1.9 trillion stimulus bill known as the American Rescue Plan.
The law, which went into effect this year, is widely seen as having the greatest impact on rank-and-file entrepreneurs who use platforms like Etsy and Airbnb, freelancers, people with side hustles and gig economy workers like Uber drivers who get paid via a mobile payments app…