In January of this year, a new tax reporting requirement was announced that will impact 2022 tax returns filed in 2023, regarding third-party payment networks. However, if you use Zelle® for sending money, the rule may not apply.
The modified rule says, if you receive $600 or more payments for goods and services through a third-party payment network, like Paypal, Venmo, or CashApp, these payments must now be reported to the IRS. The change, which is part of the American Rescue Plan, lowered the Form 1099K reporting threshold to $600 from $20,000 and more than 200 transactions within a year to no minimum transactions. However, it still does not apply to Zelle.
FineMark offers Zelle to its clients via the mobile banking app. This service allows users to send money directly between almost any U.S. bank accounts. Zelle does not issue 1000k forms for payments made on the Zelle Network and we are told, this will not change. The law says that only third-party payment companies that handle the settlement of funds (a process of transferring funds from a buyer to a seller in a transaction) are required to send 1099K forms to users. However, Zelle doesn’t settle funds but rather provides messaging between a financial institution and people making the payments.
If you have specific questions regarding how to report, we suggest you speak with your tax professional. To sign up for Zelle through your FineMark account, you must first be registered for online banking and then FineMark’s mobile app. Please call your relationship banker and we can help.
Interested in learning more about Zelle®? Visit our page on Zelle here.
Zelle and the Zelle marks used herein are trademarks of Early Warning Services, LLC.
