The Internal Revenue Service issued a reminder this week for taxpayers to prepare to report transactions of at least $600 that are received through payment apps like Venmo, PayPal and Cash App.

In an explainer posted online, the IRS warned small business owners about the $600 threshold for receiving Form 1099-K for third-party payments exceeding $600. .

Beginning this year, third-party payment processors will be required to report a user's business transactions to the IRS if they exceed $600 for the year.

The payment apps were previously required to send users Form 1099-K if their gross income exceeded $20,000 or they had 200 separate transactions within a calendar year.

To be clear, business owners are already required to report that income to the IRS.

The new rule simply means that the IRS will figure out what business owners earned on the cash apps, regardless of what that individual actually reports on their 1099-K, because it broadens the scope of the threshold. .

Form 1099-K is used to report goods and services payments received by a business or individual in the calendar year, but there are certain exclusions from gross income that are therefore not subject to income tax, including amounts from selling personal items at a loss, amounts sent as reimbursements and amounts sent as gifts.

"For the 2022 tax year, you should consider the amounts shown on your Form 1099-K when calculating gross receipts for your income tax return," PayPal said in a Q&A on its website

The cash apps will now be required to send users who meet the newest requirements Form 1099-K for transactions made electronically or by mail.