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This fact brief was originally published as an experiment to test the concepts behind fact briefs.
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Are personal payments on systems like Cash App and PayPal under a "tax rule" for transactions over $600?

By Christiana Dillard
NO

Contrary to a social media post, no "$600 tax rule" exists — only a reporting adjustment for business transactions.

Although the American Rescue Plan Act of 2021 changed the reporting requirements for transactions that take place through peer-to-peer payment systems, tax experts told Lead Stories that the provision is only for qualifying business transactions, which already were taxable.

The social media post conflates third-party network transactions — which are business or "commercial" transactions — with personal transactions like gifts and donations.

Steven Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Center, told Lead Stories that while the scope of what counts as "commercial transactions" can be murky, peer-to-peer payment systems usually offer the option for users to register for a business account. This option helps payment systems identify which users should receive a specific form, Form 1099-K, from the IRS.

This fact brief is responsive to conversations such as this one.
ABOUT THE CONTRIBUTOR
Lead Stories is a fact checking and debunking website at the intersection of big data and journalism that launched in 2015. It scouts for trending stories, images, videos and posts that contain false information in order to fact check them as quickly as possible. It actively monitors the fake-news ecosystem and doesn’t wait for reader tips or reports before getting started on a story.
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