IRS requires PayPal, Venmo to report users’ earnings over $600

The notice posted on the IRS website, titled "Get Ready now to file your 2022 federal income tax return," warned taxpayers that even just "a single transaction exceeding $600 can trigger" the need to fill out a 1099-K form to "track the amounts received." As NBC News reported in January, "As of Jan. 1, mobile payment apps like Venmo, PayPal and Cash App are required to report commercial transactions totaling more than $600 per year to the Internal Revenue Service."

The American Rescue Plan Act of 2021, otherwise known as the COVID-19 Stimulus Package, is a $1.9 trillion bill signed by Biden, that sent out stimulus packages of cash. That act also "lowered the reporting threshold for third-party networks that process payments for those doing business," said the IRS.

"Prior to 2022, Form 1099-K was issued for third-party payment network transactions only if the total number of transactions exceeded 200 for the year and the aggregate amount of these transactions exceeded $20,000," the agency said. "Now a single transaction exceeding $600 can trigger a 1099-K."

The IRS also announced that the third party payment apps will send out 1099-K forms by January 31.

All in all, income-taxpayers will be mandated to report "gross payments that exceed $20,000, AND more than 200 such transactions" for returns for years prior to 2022, and "gross payments for goods or services that exceed $600, AND any number of transactions," for returns for years after 2021.

According to Pew Research, 16 percent of Americans participate in the "gig economy," though not all of those people are paid through third-party apps.

The mandated reporting of transactions that exceed the $600 threshold are joined by Biden's increased funding of the tax-collection agency to hire 87,000 new agents as a result of the Inflation Reduction Act.

Zelle has said on their website that they do "not report any transactions made" on their network to the IRS, "even if the total is more than $600."