Tax form item in new law will hurt working people

A provision of the American Rescue Plan Act will require people earning at least $600 from third-party settlement organizations such as PayPal to report this income on a 1099-K form when they file their 2022 tax returns. Dreamstime/Tribune News Service

MASSENA — This has been a really tough two years for my family, to say the least. Living through a pandemic has been a challenge on many levels — in terms of health concerns, schooling at home and the roller coaster of intermittent shutdowns.

Throughout it all, perhaps the most difficult was living in fear each month without knowing how I was going to make ends meet, providing for my family and thinking about paying my bills. And in the conversations I have with my neighbors, my friends and co-workers have mirrored my own financial stress.

But we’re a hardy bunch in upstate New York, and we’ve learned to adapt to survive. I’m a single mom myself, and I’ve dealt with constant layoffs as the economy has see-sawed. So I’m used to figuring out ways to find supplemental income when a steady paycheck hasn’t always been in the cards.

Online marketplaces have been steady lifesavers. Even though I’m located in a tiny town, these marketplaces let me reach buyers around the world, which has been especially important during a pandemic when I haven’t always been able to leave my house. But a relatively unknown provision hidden in the American Rescue Plan threatens all this, despite lawmakers telling me the bill is supposed to help hardworking Americans like myself.

For most of my life, I’ve hunted treasures at garage sales and collected antiques. More recently, I’ve sold pieces of my collection to pay the next bill, or sold random household items that we no longer needed to make my mortgage. Now this new law threatens this fragile balance I’ve created.

Section 9674 of the American Rescue Plan Act means that tax reporting requirements for people who sell used goods on the side will soon change. And this will apply to both taxable and non-taxable income.

Whether I make hundreds of dollars or a couple thousand on my kids’ outgrown clothes — money that I use to buy them clothes, shoes and school supplies — I’m going to receive a new specialty tax form called a 1099-K. And so will most anyone else selling random stuff online.

I’m not a small-business owner. I am a mother trying to give my kids a decent life. Selling my family’s stuff when times are especially tough helps us get by.

My friends and family do the same thing. We’re all just trying to make a living, but sometimes our jobs aren’t enough. Knowing how easy it is to turn to online platforms to earn extra money gives me peace of mind.

If my car’s transmission gives out one day, I can sell my older daughter’s prom dress from last year online to help pay to fix it. Or if my younger daughter needs a pair of shoes, I can sell a couple pairs she’s outgrown, then get her set up with new sneakers.

I pay my taxes. What I don’t need are new tax forms to understand or new regulations on this small but necessary income I make from selling online. This new law will report even non-taxable income on the sale of used goods to the IRS, meaning people like me could end up paying taxes we don’t actually owe.

While the law may be well-intended, I’m afraid that the consequences will affect the very people the law is trying to help. Confusing tax regulations and more tax forms are the last thing we need. For this reason, I encourage other online sellers, other Americans just trying to get by, to do the same — to take action.

Section 9674 of the American Rescue Plan must be amended. Otherwise, our country runs the risk of imposing unnecessary and serious hardships on the hardworking individuals, families and communities that represent the backbone of our national economy.

Editor’s note: People who receive payments of at least $20,000 or more from third-party settlement organizations such as Cash App, PayPal, Venmo and Zelle have to fill out a 1099-K form. For such revenue obtained beginning Jan. 1, the threshold will be lowered to at least $600. This will affect income received throughout 2022 and must be reported on tax returns filed in 2023.

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Johnson Newspapers 7.1

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