Venmo, PayPal, Cash App must report payments of $600 or more to IRS
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Here (Iceland) it's free to transfer money between individuals via your bank. You simply give them your ID number and bank account and it's done instantly. US Banks are leagues more advanced than the ones here, and the only reason services like this exist is so that banks can directly or indirectly make money from them. People in the US need to demand better from their banking institutions.
Latency is getting better and I think 2022 is the year a big change to the ACH system is getting rolled out that should decrease that wait time to less than 24 hours for most transactions.
But you'll still have all of these companies vying for the in-between so they can make money investing transitional funds. Now you see services like Cash.app moving to a more bank-like structure with a debit card and Apple Pay, so they can keep that money in their system and they can continue to do stuff with it.
I agree with your broad point though. This should be easier in the US.
My bank has no effective method for me to initiate a transfer to another account in any rapid fashion that is not my own account. Even to send to an account at the same bank both parties must be on the phone with the bank at the same time. I get more value out of using Cashapp as a bank by setting up my direct deposit to go to Cashapp. Most banks I use just outright suck, and I am tired of how much they tie any activity to my own physical existence. It has only ever been a barrier to my own productivity.
It's pretty easy to hop to a different institution for checking/savings if the current one isn't working out for you.
The problem is that (1) most consumers don't know this is a thing, and (2) as you said, the UX of sending money through Venmo is generally far better than having to log in to your institution's mobile banking app, get past MFA, and then find the option to send money to someone. Zelle also lacks the concept of requesting money (I think), and that feature is a big QOL advantage in my experience.
By owning both ends of the transaction, the UX of Venmo is so much better it isn't even funny. I will never use Zelle again if I can help it. Zelle's limitations (set by each bank) are as bad as Venmo's (eg can only send $2,000/month to a recipient), at which point I might as well just keep using Venmo.
Yes Zelle is so bad when it messes up. I hate it so much.
Hopefully, FedNow Instant Payments will force banks to provide better service and remove the need for workarounds like Venmo.
I agree with the minimums and send time. It’s ridiculous that a transfer I make every week to my wife takes 30 mins to complete. Slower than Bitcoin.
Interac E-Transfer minimums are 0.01$. Money is going straight into my checking accounts.
The US government has always had the opportunity to come out with a digital equivalent to cash, that they policed rather than selectively hold private entities liable.
Supposedly, this is coming out soon called FedNow.
https://www.federalreserve.gov/paymentsystems/fednow_about.h...
Electronic money transfer should be a government utility, subject to courts rather than private business’ whims. Although, the US government does like sitting on the sideline and maintaining plausible deniability.
> If your bank or credit union does not yet offer Zelle®, your weekly send limit is $500. Please note that you cannot request to increase or decrease your send limit.
https://www.zellepay.com/faq/there-limit-how-much-money-i-ca...
In addition, if your financial institution is not partnered with Zelle, you can't send money to anyone whose financial institution is also not partnered with Zelle:
> If your bank or credit union does NOT offer Zelle®- The person you want to send money to, or receive money from, must have access to Zelle® through their bank or credit union.
After a few phone calls with their customer service department, it was evident that it was not going to work out. ALSO, they had no way to 'refund' that person the sizable amount of money beyond waiting the 2 weeks or so it takes for that money to be 'unclaimed', and thus reverting to the originating account.
So, for 2 weeks, thousands of dollars were 'stuck' in no mans land.
It all resolved out, when the timeframes were hit, and transactions reversed, but it still boggles my mind that they do not have a method beyond this when such cases arise.
You can also just send the money to their bank account if you really wanted to, but nobody actually likes doing that when you can use the protections (however imperfect) these services provide.
I think most countries have solved this problem by now - i.e instant transfer through apps. Seems like every country has their own service. Would be nice to get some larger unified version - that'd be cool.
There's SEPA and SEPA Instant for the eurozone, and they are awesome ( free, fast, reliable, only an IBAN required).
In Australia, a regular person with knowledge of my bank code (BSB) and my account ID isn't able to withdraw money from my account, but they can send me money. It's very low risk.
For the last few years I've been able to associate a phone number or email address to my bank using PayID[1] which eliminates even that.
The BSB + Account ID can be used to set up direct debits, it's intended for ongoing/regular payments like utilities/rent/etc. Because it requires a fair bit of paperwork/infrastructure to get registered in that system, I don't think anyone would be able to get away with scamming using it for long.
Yes, but what’s the average Icelander’s monthly bank account fee?
In the US, it’s a bit fat zero.
It seems you get what you pay for.
Was hard to find any info. The Only Iceland bank I did find after searching “monthly bank account fees in Iceland” had a link to a PDF of their fees in Icelandic only (my phone won’t translate pdfs), and that was linked from their English page for newcomers.
Another fun fact: pretty much everyone here pays off their credit card every month.
The bank will close your account if you do not.
Of course there are exceptions, but this is the general rule.
(if you need money the bank will lend it to you and help you arrange payments)
https://files.consumerfinance.gov/f/201407_cfpb_report_data-... (PDF, page 9)
While there are fee-free checking accounts in the U.S., many of the largest banks only offer paid checking accounts that qualify for a monthly fee waiver if certain requirements (such as an average/minimum daily balance, an amount of monthly direct deposits, and/or a number of monthly debit card transactions) are met. However, U.S. credit unions tend to have more consumer-friendly offerings.
It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into.
Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law.
This is the part I don't get. If I sell old used phones or laptops, never at a profit, how does ebay know I'm not profiting? They just report anyway.
And before someone blurb out the usual crap about pay your taxes and that shit. 1. This is $600 total per year (from what I can gather) and not $600 per transaction. 2. People who do not invoice and not pay taxes on these amounts, are usually working on thin sidelines. Most legitimate businesses/transactions will require an invoice. and 3. This will kill any flexibility of doing small work and only becoming regularized once it's worth it. If you made $800 of freelance work, is that really worth the headaches of reporting it? Might as well not do the work and avoid the paperwork involved with that.
And let's not talk about all the confusion that is going to arise from people, family and friends transferring money to one another. If really enforced, this is a clusterfuck for those making less than minimum wage and doing casual side hassles.
The funny thing is that many people (reading reddit/news sites) think this is a good idea because it'll catch the "tax evaders".
> "Yellen has argued that the move will reduce the amount hidden by billionaires"
What a circus we are living in.
You’ve always had to report freelance work, even before this policy.
It’s not that difficult at all. Any of the tax prep software out there will walk you through it.
It’s trivially easy to report small jobs. $800 would definitely be worth keeping the documentation and typing a few numbers into the tax software at the end of the year.
> And before someone blurb out the usual crap about pay your taxes and that shit.
People who make below the taxable rate are not in a position to use TurboTax, understand the different forms or read regulation. They do not pay a tax for a reason (too little income) and I think they should be exonerated from these forms because of the reasons that made them make less than the taxable rate (they don't understand the forms). Not everyone doing freelance work is a software engineer.
>It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall in
> It’s important to note that this change — which will be applied during 2022’s tax year and moving forward — applies only to payments received for sales of goods and services, and not to friends and family payments.
[0]: https://finance.yahoo.com/news/tax-law-sell-more-600-1548205...
I think this is the most relevant line. Goods and services is a specific opt-in tag. All the other quotes left it unclear if the completely fanciful descriptions that get put into Venmo payments were actually going to become tax-reporting criteria.
>It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into.
Instead, I now have to file a W2 for my new nanny, complicating my taxes and hers. After my nanny takes the standard deduction, they’ll collect minimal additional taxes. A wasteful policy that just increases governmental overreach.
Also, notice that my nanny’s total income is less than the standard deduction. She’s ultimately paying no taxes, just like my gardener and house cleaner.
If the democrats want to increase tax revenue, pass laws that reward people for turning in under reporting of inter-generational wealth transfer - like Trump received. If accountants and lawyers can claim 10% by turning in their customer’s fraudulent tax schemes, the country will collect substantially more than this legislation.
The game is rigged, use every opportunity you have to break the rules to get ahead because the people who lord over us definitely are.
The TAM of unpaid taxes Has to be substantially larger when it comes to high earners
Ultra high earners can afford sufficient lawyers to turn it into a THX-1138 situation for the IRS.
Certain elements in Congress have encouraged this by doing everything they can to cut the IRS budget. From 2010-2018 the budget was cut sufficiently to cause the IRS to cut its enforcement staff by 30%.
Here's an article about it [1]. Some of the numbers in there are shocking. E.g.,
> Without enough staff, the IRS has slashed even basic functions. It has drastically pulled back from pursuing people who don’t bother filing their tax returns. New investigations of “nonfilers,” as they’re called, dropped from 2.4 million in 2011 to 362,000 last year. According to the inspector general for the IRS, the reduction results in at least $3 billion in lost revenue each year. Meanwhile, collections from people who do file but don’t pay have plummeted. Tax obligations expire after 10 years if the IRS doesn’t pursue them. Such expirations were relatively infrequent before the budget cuts began. In 2010, $482 million in tax debts lapsed. By 2017, according to internal IRS collection reports, that figure had risen to $8.3 billion, 17 times as much as in 2010. The IRS’ ability to investigate criminals has atrophied as well.
[1] https://www.propublica.org/article/how-the-irs-was-gutted
Is this "shocking"?
In FY2021, the federal government brought in $4.05 trillion dollars. [1]
This means this is less than 1/1000th, or 0.07% of revenue.
The IRS budget is $12 billion dollars, and it was previously $14 billion, or $2 billion more [2]. What you're saying is that we lost $1 billion while managing to reduce the IRS workforce (and the number of people hassled by tax audits) by 30%. That sounds like a great deal.
[1] https://datalab.usaspending.gov/americas-finance-guide/reven... [2] https://www.irs.gov/statistics/irs-budget-and-workforce
Reading just the title, you might assume this means personal payments too.
Again, this does not change personal taxes.
Now, folks are on the hook for self-reporting. Previously, the thresholds were $20,000 and 200 transactions, which were maybe too lenient. Had lawmakers just halved the threshold to $10,000, I don't think most people would care. The $600 is too low, e.g. guitars easily fetch a grand, and Leica M bodies are easily over that.
Also, what are Nancy Pelosi's stock gains compared to any folks that might have been not reporting their illicit <$20k income?
This is basically the separation that sole proprietorships have to go through. Stuff that is exclusively used for your business is deductible, anything for personal use isn't.
I think you're working from a different set of assumptions than GP. They were specifically contending that exclusive expenses could not be deducted, even if the overall net value of transactions is negative (because it's not a business, but just a partial recovery of hobby expenditures.)
[1] If you're doing that, you should, like, stop. I'm not a lawyer and this is not tax advice, but you should probably stop.
I’m only sort of joking, the IRS has historically scrutinized attorneys more than other professions.
Like I’m not the IRS, if some small artist on TikTok wants to commit tax fraud by not reporting my purchases or charging sales tax that’s on them. I’m not gonna narc.
I'd imagine some similar situations will crop up with this change. (Let's face it, the IRS will probably be looking at all transactions and not just those marked as business transactions.)
More importantly, is this just an example of regulatory capture by the payment platforms? I used to pay my landlord rent through PayPal, “friends and family” no fee. Now PayPal will ask if that’s a business transaction? (Which I recognize it is, but now it’s a legal requirement to tell PayPal?)
How about Zelle? Did the article just fail to mention it, or is Zelle not considered to be a third-party payment processor since it is offered by the banks themselves?
Seriously I don't want anyone making under 100K to pay taxes. Heck maybe under 150K.
We have so much fucking money in this govt that we seriously don't need more taxes. Let's use the money we have to make shit better for people first, before we ask them to give up more of their $€£¥
More taxes isn't going to make that better :(
> Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law.
This effectively guarantees self reporting obligation (even if the buyer reports it as a commercial transaction).
Is your wife seeing low priced items sourced from those marketplaces, or sold on those marketplaces?
This is why people fucking hate congress.
Wholeheartedly agree.
And to go one step further: how many percent Americans would have voted yes to something like this if they had been asked directly?
Representative democracy is utterly broken.
It's the worst form of government, except all the others that have ever been tried.
You are right on one count, though, there are a lot of broken aspects to this particular flavor of representative democracy. It's the sort of thing that happens when you keep version 1 running in production for 250 years, with limited ability to patch it.
I disagree. There are places where direct democracy works quite well and has for a very long time.
The US certainly isn't one of them.
The patching process is called amendments. 17th put lobbyists in control. https://www.senate.gov/artandhistory/history/common/generic/...
So we should just try new ones then?
That seems an unfair burden. Many laws cover complex matters and the average American cannot be expected to know the pros and cons of every bill. I like clean water, for instance, but my opinion on what that means isn't well developed enough to vote on laws on exactly what should be permitted.
Our lawmakers aren't exactly subject matter experts either. And their SMEs are probably often just lobbyists.
Maybe that's because I've always lived in a direct democracy where it's commonplace to propose or challenge new laws, and while engaging in that process does require a few hours every now and then, I've always felt that's more than worth it.
By all means, I very much support citizen led initiatives (and there have been some excellent ones), but not out of the blue as an after the fact evaluation of a law.
edit: it seems many people truly didn't know about this. It was widely reported in right-leaning news before the American Rescue Bill passed.
So, yeah. This only seems normal because we accepted the last overly-intrusive measure.