How freelancers can prepare for changing tax requirements
If you’re a freelancer or gig worker who receives payments via apps like Venmo, Zelle, Cash App or PayPal, your tax reporting requirements will change for the 2024 tax year
NEW YORK — Workers across different industries are increasingly receiving some or all of their income via apps. They include tutors, graphic designers, hair stylists, and all kinds of independent and self-employed workers, along with merchants who sell products online through Etsy, eBay, Amazon and other sites. But tax law is still catching up when it comes to how best to report this income.
If you’re a freelancer or gig worker who receives payments via apps like Venmo, Zelle, Cash App or PayPal, your tax reporting requirements will change for the 2024 tax year. The law will not affect the amount of taxes owed, but it will change how you report income with 1099-K forms.
The changes were supposed to take effect for the 2023 tax year, but they have been delayed. The tax filing deadline is April 15.
For the current tax year, freelancers and small business owners still only need to use 1099-K forms to report third-party app payments totaling $20,000, and any number of payments above 200. But beginning next year, that threshold will be just $5,000, which will eventually be lowered to $600. The changes were supposed to take effect for the 2023 tax year, but they have been delayed.
Some in the space say the new law will benefit both freelancers and the IRS by improving information gathering, especially for people who are self-employed and merchants who sell online.
Freelancers, gig workers, and online sellers owe taxes on their income regardless of whether they meet the reporting threshold to use 1099-K forms, but it can be difficult to keep track of every
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