BUFFALO, N.Y. (WBEN) Tax season officially opened Monday. Each season comes with its own wrinkles. This year is no different says Esther Gulyas, President and CEO of EG Tax.
Side hustles, gig income, is taxable
In a new reporting requirement, the Internal Revenue Service (IRS) wants to know if you had a side hustle or gig income last year. You're required to report the earnings on your 2021 income tax return. Income from gig work is taxable.
A new federal requirement requires companies that offer platforms for selling goods and services, such as Etsy and Airbnb, to issue IRS Form 1099-K to anyone who received more than $600 per year via those platforms.
The companies must also send a copy to the IRS.
"Lets say you're a trader," said Gulyas, "and you use Venmo or eBay. The federal government wants to make sure all of the income is reported for people who receive gig income, from buying and selling online. If there's more than $600 dollars in any of those trades, it has to be reported to the IRS," said Gulyas.
She cautions, however, that it's not all reportable.
"Just because you had $600 in sales, doesn't mean it's taxable. It could be garage sale items such as purses that you bought for $200 and you sold at a loss for $30. If you're in the business of doing that as a side hustle, you should know that the IRS is watching that now," she added.
There is nothing to worry about for those who use the platforms for personal transactions.
To help identify tax cheats, the IRS as of January 1, started requiring all
third party payment processors (such as Venmo, PayPal, and Cash App) to report payments received for goods and services of $600 or more a year.
Child Tax Credit
Something else to watch for when you file your 2021 taxes, is the Child Tax Credit. "They were giving the money to kids under 18," said Gulyas. Some of the money was given in advance, so taxpayers have to understand that if you got money in advance, you have to adjust the money you're going to get when you file your return."
Gulyas says you can't file until you receive a letter from the IRS, 6419, which explains how much you got in advance. Without it, it will hold-up your refund.
The IRS is millions of returns behind in processing 2020 returns.
New State Property Tax Credit
There is new credit on the 2021 New York State tax form. "This affects many, many property taxpayers," said Gulyas. "You can get a refund of $250 to $350 depending upon whether your property taxes exceed 6% of your adjusted gross income.
There is no application for the Real Property Tax Relief Credit.
About 1.1 million of New York’s 4 million homeowners will qualify.
Hear the entire interview with Esther Gulyas of EG Tax below.
