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Man looking over his expenses to file taxes
Money; Getty Images

As inflation continues to pinch Americans’ budgets and labor demand remains high, it’s likely more people will look to supplement their income — and the tax man is starting to take a much closer look.

For now, things remain pretty much as they were. On Dec. 23, the IRS announced a one-year delay for implementing a new reporting standard. This now goes into effect with tax year 2023, rather than potentially ensnaring gig workers who were unaware of the looming change.

Previously, the threshold for 1099-K reporting was 200 transactions with a total value of more than $20,000. In the past, earnings beneath that amount might have flown below the IRS’s radar.

The American Rescue Plan Act of 2021 sharply lowered that $20,000 floor. The new IRS reporting protocol directs third-party payment networks like PayPal, Venmo and CashApp to generate 1099 forms for any users who receive more than $600 in gross payments — and any number of transactions — over the course of the year.

The IRS clarified that using services like Venmo for person-to-person payments are not subject to taxes, but users of these services — as well as some lawmakers and tax policy pros — had expressed concern that the burden would be on taxpayers to prove that transactions between friends to, say, split vacation expenses shouldn’t be classified as income.