🔄2022 Tax Law Changes
You may have heard about changes the IRS is making to ensure online sellers pay the taxes they owe. Read more about these changes in this article.
The effects of the COVID-19 pandemic are still alive and well as the IRS has implemented tax law changes for 2022. The pandemic turned the nation’s attention toward online shopping, bringing a dramatic increase in online sales on platforms such as Amazon, eBay, Shopify, and Etsy. Along with that, new eCommerce sellers transformed side hustles into main hustles with the beauty of the Internet and online marketplaces. Despite these new tax law changes from the IRS, there is no need to fret because understanding the changes and what can be done to face them is simple, prepping you for more online selling success.
What exactly are these changes?
IRS Form 1099-K now has a $600 minimum sales threshold on each business payments platform, such as Amazon Payments, eBay, Etsy, PayPal, and even Venmo Business, with no minimum number of transactions. This threshold has dropped from the previous boundary of $20,000 with 200 unique transactions.
This form will be mailed to sellers meeting the new threshold with sales in 2022 beginning in January of 2023.
There is no need to worry about sales before 2022, as profits made from those years will still operate under the $20,000 and 200 transactions threshold.
The line between business and hobby can get pretty blurry, but generally if you earn an income from your hobby, that profit income is considered taxable.
If you make $400 or more in profit, you should probably file.
If you still aren’t sure about whether your hobby is a business, go through this checklist provided by the IRS: https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
How can you prepare for tax time?
Preparing for tax season is less stressful when all of the important information is neatly laid out in one place. Luckily, CommerceNavigator’s Schedule C worksheet and AI-powered transaction importing and categorization can keep you organized even before it’s time to start doing your taxes. Whether you do taxes by yourself, with an online tool, or with an accountant, CommerceNavigator makes navigating your taxes a breeze. Plus, our free Knowledge Base provides more advice and important news that can help your business be organized, grow, and reach new customers.
There is no need to stress with CommerceNavigator. Stay in the loop and take advantage of our variety of resources to ensure that your business is on track for success.
Our lawyers want you to know: while we're pretty proud of our team here at CommerceNavigator, we aren't acting in an official capacity as your CPA or attorney. We provide general information for educational purposes, not specific or professional advice. Since every situation is unique, you may want to consult with the appropriate experts for accounting, legal, and business issues.
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