Most Adults Aren’t Worried About Income Tax Liability for Online Payments. Gen Zers Are the Exception

Though the Internal Revenue Service has pushed back plans to require payment providers such as Venmo and PayPal to send tax forms to Americans who received more than $600 from business transactions through the platforms, a new Morning Consult survey finds that 2 in 3 U.S. adults are not concerned about the tax collection changes. Roughly half of Gen Zers, however, are concerned about the new tax implications.

Younger generations most likely to be concerned about paying taxes on income from payment platforms 

• While a third of adults overall said they were concerned about plans by the IRS that would require payments providers such as PayPal or Venmo to report income for users’ business transactions over $600 per year, interest in the issue varied by age, with 52% of Gen Z respondents saying they were worried about the plans.
• According to Morning Consult Brand Intelligence, among Venmo users in the last 12 months, 38% of users were between the ages of 30 and 44, while 26% were between 18 and 29. Among PayPal users over the same time period, 30% were ages 30 to 44, and 19% were between 18 and 29.   
• Men (37%) were more likely than women (28%) to say they were concerned about receiving a 1099-K form for income received from payment platforms.  
• Democrats (36%) and Republicans (33%) reported relatively equal levels of concern over the change, while independents (27%) were slightly less likely to say they’re worried about receiving tax forms for payments received.

Tax preparation pros decry confusion over new rules

With tax season in full swing, Americans who have used payment platforms such as PayPal or Cash App to collect more than $600 in funds annually may be breathing a sigh of relief this year. Previously, the IRS had required payments providers — popular with those who sell goods or services on sites like eBay, Airbnb, Poshmark and Etsy — to send users a 1099-K form if they had more than 200 transactions and received more than $20,000. 

New rules issued by the IRS for the 2022 tax year would have lowered that threshold to $600 and eliminated the transaction total requirements, but following pushback from the tax industry on the grounds that tax pros weren’t ready to implement the new rules and the risk of users receiving 1099s for personal payments on the platforms, the IRS agreed to hold off on implementation for another year. 

The IRS said late last year that beginning Jan. 1, 2023, all third-party settlement organizations (TPSOs) will be required to report total transactions to users that exceed a minimum of $600, though additional confusion may lie in what platforms qualify as a TPSO. The Congressional Research Service noted last year that TPSO status in the eyes of the IRS depends on the company’s legal structure — while Airbnb qualifies as a TPSO, Zelle does not. 

The Feb. 14-17, 2023, survey was conducted among a representative sample of 2,201 U.S. adults, with an unweighted margin of error of plus or minus 2 percentage points.