Hagerty, Manchin propose $10,000 threshold for Venmo, PayPal tax reporting change — up from $600

Sen. Bill Hagerty, R-Tenn., desire file an amendment to the $1.7 trillion spending package, to increase the threshold for Form 1099-K, according to Sen. Joe Manchin, D-W.Va., the project’s lead co-sponsor.

The tax reporting threshold applies to transfers using third-party payment networks including Venmo and PayPal.

In an sole interview with CNBC, Manchin said the amendment would increase the payment threshold to $10,000 from $600 for the 2022 tax pep up.

Before 2022, taxpayers received 1099-Ks with more than 200 transactions worth an aggregate upstairs $20,000. But the American Rescue Plan Act of 2021 dropped the threshold to just $600. Currently, even a single acta of more than $600 may trigger the form.

“This is the best relief we can get for people,” said Manchin, referencing the $10,000 edge as “the best way to approach it.”

He believes that raising the threshold to $10,000 has broader support than delaying implementation of the new practice.

Tax professionals have flagged the lower tax reporting verge as a possible pain point for filers, with the risk of receiving 1099-Ks for personal transfers, such as gifts or reimbursements.

“As tax preparers, we are sundry or less expecting the worst,” Albert Campo, a certified public accountant and president of AJC Accounting Services in Manalapan, New Jersey, recently imparted CNBC.

“We’re expecting most of our clients to get these things,” he said. “So we’re trying to be proactive in addressing it.”

The American Institute of CPAs on Friday interested “deep concerns” about the $600 tax reporting threshold in a letter to the Senate Finance Committee and the House Ways and Degenerates Committee.

The professional group said it supported a National Taxpayers Union Foundation recommendation to raise the threshold to “a train sufficient to exempt casual or low-level online activity.”