TL;DR: If you receive more than $600 in business income through a 3rd party cash app in 2022, you'll receive Form 1099-K from the IRS in January 2023 and must report that income
A fair warning for those who use cash payment services such as Cash App, Venmo, PayPal, or Zelle for business transactions:
Uncle Sam and the IRS are coming 😰
Taking effect on January 1st, 2022, a new rule will allow the IRS to scrutinize business revenue of over $600 that takes place on these apps. Personal transactions won't play into this but the $600 threshold is new as the current threshold sits at $20,000.
So if you receive more than $600 through 3rd-party cash apps, you'll receive form 1099-K from the IRS.
This is how the current process is stated on the IRS' website with the prior thresholds:
"You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:
So for creators and freelancers who use third party cash apps, it's going to become even more important to keep clean and detailed records of transactions. It may even make sense to set up a separate account solely for business purposes. However, depending on how the money was earned, these changes don't necessarily mean you'll owe taxes on the income, it just has to be reported.
But overall, it's always important to keep detailed records of your finances and this rule change shouldn't really alter how you run your business, you may just have a little extra work come tax time 2023.
Disclaimer: This is not tax, legal, or investment advice. Please consult a tax professional before implementing any mentioned strategies.