Side-hustlers who get paid via Cash App and Venmo risk being audited if they don't report their earnings, IRS warns

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Individuals who earn money through side hustles should file a 1099-K tax return to declare the income. AP/Reuters
The IRS warned people who earn more than $600 from side hustles to declare their earnings to avoid audits.
Workers who are paid through apps such as Venmo, Paypal, and Cash App should file a 1099-K tax form.
Tax expert Lisa Niser told Insider the "worst case" could be penalties for insufficient filing.
People who make money from side hustles could face a tax audit if they don't report earnings over $600.

The Internal Revenue Service (IRS) warned this week that sideline workers and part-time workers should declare payments they've received from apps like Venmo, PayPal, and Cash App above the $600 threshold.

Individuals who earn income in addition to their full-time employment and gig workers should file a 1099-K tax return to declare their earnings, the IRS said. Otherwise, an audit by the tax collection authority could be triggered.

The threshold for how much employees earn before they have to file a tax return has dropped significantly since last year. It used to be $20,000+ in revenue from 200+ transactions, but now it's every $600+ payment.

Tax expert Lisa Niser told Insider that the "worst case scenario" for people who don't report their income to the IRS "is that they will be audited" and could face penalties and interest.
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Niser also advised sideline workers to take a tax course — or hire an accountant.
"I personally believe that an accountant is a great investment for everyone because a good accountant does more than just do a tax return," she said. "The knowledge and access to information can be invaluable."
The change in when workers must declare income came into effect last year when the COVID-19 stimulus package, also known as America's 2021 bailout plan, was passed by Congress.
"It is important that your business books and records reflect your business income, including any amounts that may be reported on Form 1099-K," the IRS said on its website.

It added: "You must report any income you receive on your income tax return. In most cases, your business revenue comes in the form of cash, checks, and debit/credit card payments.”
Read the original article on Business Insider

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