CORPUS CHRISTI, Texas – With the new year comes a new tax law, and it’s a law many of us will likely overlook until tax season 2023.
Do you know all of these transactions that we do using things like Zelle, PayPal, Cash App, and Venmo? Well, we better start keeping records of all these transactions because the IRS is going to start looking at those records and asking questions.
We spoke to local tax expert, Bill Clark, who explained in more detail.
“You have to report these transactions because that’s what the government is going to look at, is to match those items to see if you’ve included them on your tax returns,” he said.
Clark has been helping people with their taxes for 35 years. He says that when it comes to this new tax law, many transactions we make will not be taxable, but will be declared taxable unless we provide documentation to prove otherwise. So keep track of all your transactions using these payment methods.
Clark offers another example of how the new law will work.
“Two people share an apartment. They share the rent. I pay the rent and you can pay me back with a Venmo or one of those other cards. I will be notified, or the government will be notified of my transactions on them. rents I have received. ”
Clark thinks this is ultimately how the government is cracking down on tax fraud. The IRS says there is over a trillion dollars in unpaid taxes. And keep in mind that even if you don’t report your transactions on these money transfer sites to the IRS, the companies will.
“Then they’ll be required to withhold what’s called a backup withholding, which is ‘we’re going to charge you an additional 24% and hand that over to the federal government to cover your taxes,'” Clark said.