By Dee Dee Bass Wilbon & Deana Bass Williams
Congress has increased taxes and regulations on gig economy workers to cover the cost of the Biden Administration’s trillion-dollar American Rescue Plan. Online marketplaces like Etsy, eBay and even Facebook have provided a needed income boost for Americans trying to survive the brutal economic climate.
Before Congress made the change, reporting for the online sale of pre-owned goods on third-party marketplaces was for Americans with more than 200 transactions worth $20,000. The IRS reports, “Now a single transaction exceeding $600 can trigger a 1099-K.” The IRS also warns that if a 1099-K is accidentally triggered because of a personal gift from friends or relatives or reimbursement, the error cannot be corrected by the IRS. The online platform must instead fix it. Think of the potential Venmo nightmares of friends sharing a meal and reimbursing each other.
Those who will be harmed most by this change are the thousands of Americans who use online “side hustles” to make ends meet. They will have a rude awakening for the 2022 tax year.
The Biden Administration has long vowed that its tax reforms are designed to stand up to billionaires and protect the middle-class and low-wage workers.
The president’s team expects us to believe that billionaires are selling pre-owned items on Etsy for an annual profit of $600. Don’t be deceived. This new IRS reporting threshold is designed to cover the cost of the American Rescue Plan by doing anything but rescuing American families. On the contrary, it is precisely taking money from low-income families who are least able to afford it.
Minority communities and women are those who will be impacted the most. According to a study by Pew Research Center, 30% of Hispanic adults and 20% of Black adults have earned money through online platforms.
If you or someone you know is a gig economy worker, you must stay informed. Patrice Onwuka of the Independent Women’s Forum has written extensively about this issue. You can download their Top Takeaways on the 1099-K Tax Reporting Ruleby visiting IWF.org.
About The Bass Sisters: Dee Dee Bass Wilbon and Deana Bass Williams are sisters and co-founders of Bass Public Affairs a Washington, DC-based public affairs firm. They co-host the podcast Policy and Pound Cake.