Payam Javan: Last week, IRS reminded those who earn money from foreign sources to submit any potential income tax liabilities.
The IRS declared a one-year pause on enforcing a contentious new reporting regulation for internet firms for transactions over $600 on December 23, 2022. In the past, 200 transactions with a combined value of $20,000 were required for 1099-K tax form reporting. Even while tax regulations mandate that persons pay that amount, it’s possible that the IRS was unaware of earnings that didn’t reach that level.
According to the IRS, the new tax reporting requirement will take effect in tax year 2023. The American Rescue Plan, which was eventually enacted into law in early 2021, established such regulation.
According to the news release on March 1, individuals who frequently earn tips while working in restaurants, hotels, hairdressers, and related industries must also report those payments.
The warning stated that tips that the employee failed to disclose to their employer must be disclosed individually on Form 4137, Social Security and Medicare Tax on Unreported Tip Income, and must be included as additional wages on their tax return. It further said that the employee is responsible for paying their portion of the tips’ Social Security and Medicare taxes.