Biden Raises Taxes on the Middle Class The New Tax 1099-k Explained

 This should be like headline news, Biden raises taxes on the middle class. This is Better Well with Caleb Williams. On today's episode we're going to talk about the new tax on the middle class. You're going to want to watch this and share this if you use Venmo Cash App. If you use Facebook Marketplace or anything, Appwise as it relates to exchanging money. We're going to be diving into the 1099K, which was enacted by the American Rescue Plan. With the out-further doodan, break this down, and again, talk about why this is quite frankly a big attack on the middle class. The American Rescue Act that passed earlier this year directly affects the 1099K, which a lot of people may not even be familiar with because it hasn't directly affected them until next year it will. This comes with third-party payment processors where the threshold is going to be dropped. The backstory is that the 1099, which people are most familiar with, is like if we do contract work or whatever, people just arbitrarily say 1099. There's multiple 1099s. There was the 1099 MISC, which is now the 1099NEC. This is a $600 mark. If I do contract work for you and it's $500, technically there's no 1099 involved in that because the threshold is $600. Now, if the contract work was $750, now suddenly I'm going to get a 1099NEC, which I'm going to report as income, you get the deduction for that. That's what most people, like if you're driving Uber, are doing any sort of contract work, you're familiar with that form of 1099. Now, the 1099K comes into play for payment processors. Like you had mentioned, Facebook Marketplace, Venmo, CashApp, eBay, Shopify, PayPal, Stripe, a lot of people using Stripe, a lot of people having swag shops and all kinds of things. The entrepreneurs out there that are all sorts of payment processors right now. Previously, right now, the threshold for that 1099, just like the 600 or the 1099NEC for the 1099K currently is $20,000. What that means is anything sub $20,000, there is no form generated. If you sold the AND asset via Stripe, you sold $19,000 worth of books this year. They're not going to submit a 1099K. However, if you sold $22,000 of books, you're now going to get a 1099K at the end of the year. On the full $22,000. There is somewhat of an incentive to keep that under $20,000. This can get into, do you report it? Do you not report it? It's tips as a waiter or waitress. Technically, you're supposed to report that. Just like technically, even right now, sub $18,000, you're supposed to report that as non-employee compensation. However, the IRS says it itself. There's things, and this is, it can get way far-filed to voluntary versus involuntary. But the whole premise here is that right now, if under $20,000, you don't force. Nobody's going to do it. However, pass that $22,000. Yes, you're going to get that form. This is why what you said is so important is that this is directly affecting the middle class. This is directly affecting all the people that are transacting all the things I had mentioned previously. We were talking about COVID and people selling stuff on Facebook Marketplace. If we sold a couch that we have, we'd probably make more than $600, which with the new rule would now become taxable income. Let me walk through this. Now, this is not enacted till the end of the year. Starting in 2022, this is when it's going to go into effect. I could sell a couch. I could pay for dinner and everyone could pay me back on Venmo and all the stuff. I think I made $1,000 or something on Venmo. I'm good. I'm way under the $20,000 mark. Starting next year, if I go over $600 through the whole year, you're paying me, my sisters paying me, all these people are paying me. It goes over 600. Venmo is going to send me at $1099K. I'm going to have to report that as income. That's correct. In a way, everyone's an entrepreneur now. The US government is making everyone entrepreneurs. As a result, making you pay tax on that. What's really interesting, when you broke this down for me, number one, I was like, why isn't everyone talking about this? You were the first person to share this with me. I'm like, this should be headline news. Biden raises taxes on the middle class. I just think it's an interesting thought experiment. My question is, do you agree with this or not? Obviously, our government and country are massive debt. It could be a creative way to raise money. I feel like it's attacking the top earners. No, not at all. If you're making more than $20,000 on any one of these platforms, you're already getting the form. You're already reporting that as income. It's like the American Rescue Act. We're going to save America. We're doing exactly what we say we're not doing. All the rhetoric of tax the rich right now. Here we are with something that's touted as being the rescue plan. It's going to be a carte blanche. Grab a bigger wider net of tax revenue on the middle and lower classes. What's interesting is the government will use things like they won't attack the tax rate. It's very political to raise taxes. They do it all the time by lowering threshold. Or you could do this on income tax. Back in history, maybe the tax didn't change. But you could be in the top tax bracket. They lowered the threshold. They just raised taxes on you. They didn't do it. No one really understood that. They didn't complain about it. That's the same thing. They're going to bring in more tax. They're essentially taxing us more. But they're not raising taxes. They're slipping it in. It's really interesting. I'm wondering what this is going to do. How much money they're going to raise. I'm just wondering how many people are going to be surprised after the end of next year when they get a new tax. Is it 1099K? That's going to be very interesting. Let us know in the comments what your thoughts are. Do you agree, disagree? What are your thoughts on this? Do you think this is fair? We want to hear from you. If you know other people that use Venmo, I know I personally am going to share this to all my friends that use these apps. Because like me, they probably don't have a clue that this exists. Thank you so much for listening to The Better World Podcast. It would mean the world to me if you could hit subscribe, leave a review, and share this with the people that you know and love.