Since leaving the US, the idea that these services exist now boggles my mind.
Here (Iceland) it's free to transfer money between individuals via your bank. You simply give them your ID number and bank account and it's done instantly. US Banks are leagues more advanced than the ones here, and the only reason services like this exist is so that banks can directly or indirectly make money from them. People in the US need to demand better from their banking institutions.
asdff
How can you demand better of your banking institiution when the banking institution can outspend your grassroots efforts in advertising ahead of the election to put in a yes man, and said yes man recieves an order of magnitude more in donations from the banking institution than what your grassroots effort could ever raise from individual voters, along with a favorable consulting position once they are out of office with said banking institution? The whole system is designed by corrupt people to make it very easy to be corrupted, and very hard to ever systematically eliminate corruption. Hard to simply demand better when you are so beholden to this broken system.
lotsofpulp
It is not the fault of the private banks. The US government wants to hold banks liable for their customers transferring money, which is the reason all the abstractions exist.
The US government has always had the opportunity to come out with a digital equivalent to cash, that they policed rather than selectively hold private entities liable.
Supposedly, this is coming out soon called FedNow.
Electronic money transfer should be a government utility, subject to courts rather than private business’ whims. Although, the US government does like sitting on the sideline and maintaining plausible deniability.
detcader
if US leftists didn't hate unifying around class consciousness and everyone else didn't hate protesting so much they would probably call for the Boston Tea Party rioters to be hung if they were alive then, we might be able to have a more intuitive sense of what "demand better" means when our friends across the ponds suggest it
koolba
If they simply provided a separate “input” and “output” account number, it’d solve 99% of the problems with the US banking system. As it is now, anybody can submit an ACH for whatever account they’d like and the onus is on the target to monitor their transactions. All it takes is a routing and account number. It’s seriously insane.
paranoidrobot
I believe that's also a US-specific problem.
In Australia, a regular person with knowledge of my bank code (BSB) and my account ID isn't able to withdraw money from my account, but they can send me money. It's very low risk.
For the last few years I've been able to associate a phone number or email address to my bank using PayID[1] which eliminates even that.
The BSB + Account ID can be used to set up direct debits, it's intended for ongoing/regular payments like utilities/rent/etc.
Because it requires a fair bit of paperwork/infrastructure to get registered in that system, I don't think anyone would be able to get away with scamming using it for long.
That is not entirely true. A random entity can not withdraw only certain authenticated entities can. The cost of stealing is very very high.
jdavis703
The same is true in the US. ACH and wire transfers can be free (unless you're with a bank that offers "free checking" but comes laden with hidden charges). And we also have Zelle, which offers much faster transfers (it works within minutes) for free.
millzlane
I wish Zelle worked with my CU. Or my CU worked with Zelle rather.
pxx
Zelle falls back to using the visa debit network. You don't need affirmative support from your credit union.
commoner
Zelle has a low sending limit if your bank or credit union is not partnered with them:
> If your bank or credit union does not yet offer Zelle®, your weekly send limit is $500. Please note that you cannot request to increase or decrease your send limit.
In addition, if your financial institution is not partnered with Zelle, you can't send money to anyone whose financial institution is also not partnered with Zelle:
> If your bank or credit union does NOT offer Zelle®- The person you want to send money to, or receive money from, must have access to Zelle® through their bank or credit union.
I once had someone send me a decent sum of money using Zelle, but I had no Zelle account. I tried to set one up, CU not supported. Went the Debit route -- Also, in my case, not supported.
After a few phone calls with their customer service department, it was evident that it was not going to work out. ALSO, they had no way to 'refund' that person the sizable amount of money beyond waiting the 2 weeks or so it takes for that money to be 'unclaimed', and thus reverting to the originating account.
So, for 2 weeks, thousands of dollars were 'stuck' in no mans land.
It all resolved out, when the timeframes were hit, and transactions reversed, but it still boggles my mind that they do not have a method beyond this when such cases arise.
jdavis703
Two weeks is ridiculous. But one of the problems with instant transfers is it makes fraud easy. In fact when Zelle first rolled out, there were several news stories of people who were swindled. Banks don’t just move slow because they’re old and stuffy — sometimes they have speed bumps to minimize fraud losses.
yurishimo
I think most banks have solutions for this (ACH generally) but the UI sucks which is obviously a problem as well as the latency.
Latency is getting better and I think 2022 is the year a big change to the ACH system is getting rolled out that should decrease that wait time to less than 24 hours for most transactions.
But you'll still have all of these companies vying for the in-between so they can make money investing transitional funds. Now you see services like Cash.app moving to a more bank-like structure with a debit card and Apple Pay, so they can keep that money in their system and they can continue to do stuff with it.
I agree with your broad point though. This should be easier in the US.
BHSPitMonkey
Most banks support Zelle (formerly ClearXChange), which uses ACH on the back-end but delivers funds essentially right away.
The problem is that (1) most consumers don't know this is a thing, and (2) as you said, the UX of sending money through Venmo is generally far better than having to log in to your institution's mobile banking app, get past MFA, and then find the option to send money to someone. Zelle also lacks the concept of requesting money (I think), and that feature is a big QOL advantage in my experience.
fragmede
Zelle is a fucking joke. I spent 2.5 hours between three departments because Chase locked my account because I tried to use Zelle to send money. They locked my account until I reached the right department, which had this very important concept for me, which I will now share with you: If you give someone money, the money is no longer yours. After sharing this mind-blowing concept, they unlocked my account. Bank of America was slightly less aggressive, and merely flagged the transaction as fraudulent (which required another phone call to complete - and they had the same concept to share with me).
By owning both ends of the transaction, the UX of Venmo is so much better it isn't even funny. I will never use Zelle again if I can help it. Zelle's limitations (set by each bank) are as bad as Venmo's (eg can only send $2,000/month to a recipient), at which point I might as well just keep using Venmo.
politician
Banks are incentivized to hold your deposit and and disincentivized to provide you with straightforward ways of withdrawing funds. Zelle is an industry consortium of banks to offer instant payments, but even with this consensus they can’t change their nature.
Hopefully, FedNow Instant Payments will force banks to provide better service and remove the need for workarounds like Venmo.
skinnymuch
Venmo is that limited. Either rules changed or Cash App allows much higher limits. I know their overall daily, weekly, monthly limits are factors higher than Venmo.
Yes Zelle is so bad when it messes up. I hate it so much.
skinnymuch
Zelle also has major issues like holding your money for undefined periods of times without any way to do anything. I’m talking about values like $1000. Under $2500. Have never seen this happen on a Cash App or Venmo.
bubblethink
Yeah, zelle is terrible. They don't even have a cancel button. Once you start the transfer, they'll hold on to it, but the recipient won't get it and you can't cancel either. Terrible as a replacement for cash.
nwah1
Zelle does allow requesting money on the apps that I have seen. But there is no one Zelle app, so I'm sure it isn't always the same.
antisthenes
Last time I tried Zelle, it did not support my credit union, so it's a non-starter.
hhh
<24h is still painful. When I need to send a friend cash, it’s typically because they need it now for whatever circumstance they’re in. I wouldn’t even mind paying an increased fee for it to be instant, hell I already get charged a fee if it’s Paypal.
My bank has no effective method for me to initiate a transfer to another account in any rapid fashion that is not my own account. Even to send to an account at the same bank both parties must be on the phone with the bank at the same time. I get more value out of using Cashapp as a bank by setting up my direct deposit to go to Cashapp. Most banks I use just outright suck, and I am tired of how much they tie any activity to my own physical existence. It has only ever been a barrier to my own productivity.
It's pretty easy to hop to a different institution for checking/savings if the current one isn't working out for you.
smsm42
Transfers between banks are free in the US too (if you mean ACH transfers, Wires cost $30, but the only time I used a wire is paying the downpayment for my house). But setting up ACH link is both relatively complex and dangerous, since once it's set up, it can be used to move money in both directions indefinitely. Thus, not very useful for between-persons payments. Banks have other systems for such payments, but there are so many different ones that the chance random person has a bank with the system you know how to operate that is also supported by your bank is pretty low. Thus, Venmo. Paypal is easier to explain - they were born at the time banks and payment processors weren't really sure this whole internet thing is not a passing fad, so they didn't do anything. And now they have a huge incumbent advantage.
salamandersauce
Yes, but that's the point. For instance here in Canada we have Interac eTransfer which is supported by every bank. You go on your bank's app or website and you enter the email of the person you want to send money to and how much and a little password type thing and that's it. I don't need to know my friends bank info just their email. On the receiver side you just get an email and then you can pick what bank you want to deposit it in and log in as normal. And every bank has it for free these days (some used to have a $1 fee).
TrackerFF
Here in Norway a service called "Vipps" is pretty much the standard now. No fees for transfers under 5000 NOK or something like that...around $600. It's pretty much instant.
I think most countries have solved this problem by now - i.e instant transfer through apps. Seems like every country has their own service. Would be nice to get some larger unified version - that'd be cool.
sofixa
> Would be nice to get some larger unified version - that'd be cool.
There's SEPA and SEPA Instant for the eurozone, and they are awesome ( free, fast, reliable, only an IBAN required).
PragmaticPulp
This is specifically for “goods and services” transactions, which can come with additional protections through PayPal if the seller never delivers or otherwise tried to defraud you.
You can also just send the money to their bank account if you really wanted to, but nobody actually likes doing that when you can use the protections (however imperfect) these services provide.
Kiro
I don't know. In Sweden we can do the same but everyone still uses Swish where your phone number is your identifier. No-one remembers their bank account number.
progforlyfe
I've actually had decent luck using Zelle in the past 2 years for local transactions for second hand marketplace transactions (used furniture and stuff). It's not fully bank native, but quite close it seems.
moneywoes
In Canada we have E-transfer which providers similar functionality
speedyapoc
Canada here. These US services seem amazing. We're limited to "Interac e-Transfers" with archaic send times, terribly low maximums, and even per-transaction fees.
rnotaro
I don't have the same experience. All my canadian banks are covering my fees and 80% of the time the transfer is instantaneous. Most of the time under 5 minutes.
Interac E-Transfer minimums are 0.01$. Money is going straight into my checking accounts.
digianarchist
Tangerine in particular appear to be the problem with slow transfers.
rchaud
I pay a cleaning service regularly w/ E-transfer and the money is deposited within minutes. My bank imposes a $3,000 daily limit, which is more than US services seem to allow in a month.
klyrs
My bank has a daily limit, but I've always found it easy to just call and ask them to raise the limit for the day. A minor inconvenience, but I'd not like to accidentally spend more.
digianarchist
To be fair most banks waive the fee.
I agree with the minimums and send time. It’s ridiculous that a transfer I make every week to my wife takes 30 mins to complete. Slower than Bitcoin.
Scoundreller
> Here (Iceland) it's free to transfer money between individuals via your bank.
Yes, but what’s the average Icelander’s monthly bank account fee?
In the US, it’s a bit fat zero.
kjaftaedi
We don't have bank account fees.
Another fun fact: pretty much everyone here pays off their credit card every month.
The bank will close your account if you do not.
Of course there are exceptions, but this is the general rule.
(if you need money the bank will lend it to you and help you arrange payments)
emptysongglass
I don't know if Iceland follows in lockstep with the rest of EU monetary policy but here in Denmark, they take your money another way: negative inflation applied to comically low limits (100,000 DKK) equivalent to $15,000 USD.
commoner
The average U.S. checking account incurs $9.87 in fees per month (2014 data):
While there are fee-free checking accounts in the U.S., many of the largest banks only offer paid checking accounts that qualify for a monthly fee waiver if certain requirements (such as an average/minimum daily balance, an amount of monthly direct deposits, and/or a number of monthly debit card transactions) are met. However, U.S. credit unions tend to have more consumer-friendly offerings.
shric
In Australia it's free to transfer money between individuals via your bank instantly, and most banks don't charge monthly account fees.
CogitoCogito
> In the US, it’s a bit fat zero.
It seems you get what you pay for.
smsm42
Given alternatives for sending money do exist (and free), I'm fine with paying zero for a bank account.
CogitoCogito
My Swedish bank account does indeed incur monthly fees whereas my American bank account does not. That said, when comparing the quality of Sweden's system for digitaly sending money to the one in the US, I would gladly pay something similar if the US adopted a system like Sweden's. So I guess I'll just repeat what I said in my last post: It seems you get what you pay for.
c0nducktr
I don't know, what is it?
Scoundreller
I dunno, that’s why I asked.
Was hard to find any info. The Only Iceland bank I did find after searching “monthly bank account fees in Iceland” had a link to a PDF of their fees in Icelandic only (my phone won’t translate pdfs), and that was linked from their English page for newcomers.
You will receive the forms beginning next year for this year’s transactions. The form will be used to fill out your 2022 income taxes that are due in April 2023.
It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into.
Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law.
This is the part I don't get. If I sell old used phones or laptops, never at a profit, how does ebay know I'm not profiting? They just report anyway.
csomar
They don't. You'll probably need to report these transactions and get them straightened out with the IRS. Which they can't (since it's lots of people and they are probably cross-checking automatically). This will just get people flagged.
And before someone blurb out the usual crap about pay your taxes and that shit. 1. This is $600 total per year (from what I can gather) and not $600 per transaction. 2. People who do not invoice and not pay taxes on these amounts, are usually working on thin sidelines. Most legitimate businesses/transactions will require an invoice. and 3. This will kill any flexibility of doing small work and only becoming regularized once it's worth it. If you made $800 of freelance work, is that really worth the headaches of reporting it? Might as well not do the work and avoid the paperwork involved with that.
And let's not talk about all the confusion that is going to arise from people, family and friends transferring money to one another. If really enforced, this is a clusterfuck for those making less than minimum wage and doing casual side hassles.
The funny thing is that many people (reading reddit/news sites) think this is a good idea because it'll catch the "tax evaders".
> "Yellen has argued that the move will reduce the amount hidden by billionaires"
What a circus we are living in.
vngzs
My roommate sends me $700 via Venmo every month. I funnel it directly to the landlord in a direct deposit on the same day. It's frustrating to realize these transactions are going to be clearly reported as income, because I have never received income from Venmo - all I do with it is split bills. I realize I can probably sort this out with the IRS, but it seems relatively inappropriate that I would have to do that in this situation.
lotsofpulp
They will not be assuming your roommate designates them properly:
>It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall in
vngzs
I was concerned because I couldn't find the specifics on what payment tags would lead to income reporting. Here's a better article that addresses that clarification in specific terms [0]:
> It’s important to note that this change — which will be applied during 2022’s tax year and moving forward — applies only to payments received for sales of goods and services, and not to friends and family payments.
>Venmo describes a “goods and services” payment as when senders tag a purchase as such, whether it’s for a product you sell or a service you provide.
I think this is the most relevant line. Goods and services is a specific opt-in tag. All the other quotes left it unclear if the completely fanciful descriptions that get put into Venmo payments were actually going to become tax-reporting criteria.
PragmaticPulp
> 3. This will kill any flexibility of doing small work and only becoming regularized once it's worth it. If you made $800 of freelance work, is that really worth the headaches of reporting it? Might as well not do the work and avoid the paperwork involved with that.
You’ve always had to report freelance work, even before this policy.
It’s not that difficult at all. Any of the tax prep software out there will walk you through it.
It’s trivially easy to report small jobs. $800 would definitely be worth keeping the documentation and typing a few numbers into the tax software at the end of the year.
csomar
You seem to have missed this part.
> And before someone blurb out the usual crap about pay your taxes and that shit.
People who make below the taxable rate are not in a position to use TurboTax, understand the different forms or read regulation. They do not pay a tax for a reason (too little income) and I think they should be exonerated from these forms because of the reasons that made them make less than the taxable rate (they don't understand the forms). Not everyone doing freelance work is a software engineer.
etataetaet
Yep it really sucks. I'm a small eBay seller and do it 99% for fun! I make very little money per time spent but I can easily sell over $600 worth of product in one year. This makes it super annoying and basically not worth it anymore!
stjohnswarts
This is the elite assuming that only poor/middle class people are crooks while they deal daily with insider information, special carve outs by government, etc.
lotsofpulp
>And let's not talk about all the confusion that is going to arise from people, family and friends transferring money to one another.
>It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into.
jmpman
So, I elect the Democrats, with promise of healthcare reform, free college tuition for my kids and environmentally friendly policies.
Instead, I now have to file a W2 for my new nanny, complicating my taxes and hers. After my nanny takes the standard deduction, they’ll collect minimal additional taxes. A wasteful policy that just increases governmental overreach.
loeg
The household employee clarification was in 2015. And nannies are employees. So yeah, you give them a W2 and they pay normal income taxes, like we all do on income we earn. Are you saying there should be a special tax reporting and collecting exemption for domestic workers?
jmpman
There’s already an exception of up to $2300/year for a nanny tax. Less than that, and you don’t have to file for them. Yes, they should have dramatically increased the nanny tax exemption - ideally up to the standard deduction.
loeg
The lower exemption is intended for like, occasional babysitting. A full-time nanny earns more like $40-50k around here; somewhat less elsewhere, but not less than half that. Still -- why should nanny income up to the standard deduction not be reported? Other workers making similar income have their income reported and are responsible for filing and paying taxes.
jmpman
My gardener is very likely working illegally, and not paying taxes. My house cleaners are likely not reporting their income for taxes. But the nanny, working part time, making around $10k/year, I have to consider my employee, provide her a W2, submit forms to the IRS. The difference is that I don’t have to consider the gardener or house cleaner as my employees.
Also, notice that my nanny’s total income is less than the standard deduction. She’s ultimately paying no taxes, just like my gardener and house cleaner.
If the democrats want to increase tax revenue, pass laws that reward people for turning in under reporting of inter-generational wealth transfer - like Trump received. If accountants and lawyers can claim 10% by turning in their customer’s fraudulent tax schemes, the country will collect substantially more than this legislation.
echelon
Not to mention this and other policies has made the stock of PayPal, Square, and other fintechs crash 40%, wiping out tons of investors.
type-r
Thank god they at least didn't get those other policies passed.
quickthrowman
How about the IRS focuses on the major tax cheats instead of shaking down the proles for loose change?
The game is rigged, use every opportunity you have to break the rules to get ahead because the people who lord over us definitely are.
stjohnswarts
It's all about getting the little guy and carving out new loopholes for 100 millionaires and up. Lol heaven forbig Aunt Bea doesn't pay taxes on that $1000 of profit she made at last year's farmer's market weekends. Good thing she only took cash...
thathndude
I’ve never understood this. You can get $500 from 1,000 tax payers. But wouldn’t those same resources be better spent targeting ultra high earners?
The TAM of unpaid taxes Has to be substantially larger when it comes to high earners
tzs
> I’ve never understood this. You can get $500 from 1,000 tax payers. But wouldn’t those same resources be better spent targeting ultra high earners?
Ultra high earners can afford sufficient lawyers to turn it into a THX-1138 situation for the IRS.
Certain elements in Congress have encouraged this by doing everything they can to cut the IRS budget. From 2010-2018 the budget was cut sufficiently to cause the IRS to cut its enforcement staff by 30%.
Here's an article about it [1]. Some of the numbers in there are shocking. E.g.,
> Without enough staff, the IRS has slashed even basic functions. It has drastically pulled back from pursuing people who don’t bother filing their tax returns. New investigations of “nonfilers,” as they’re called, dropped from 2.4 million in 2011 to 362,000 last year. According to the inspector general for the IRS, the reduction results in at least $3 billion in lost revenue each year. Meanwhile, collections from people who do file but don’t pay have plummeted. Tax obligations expire after 10 years if the IRS doesn’t pursue them. Such expirations were relatively infrequent before the budget cuts began. In 2010, $482 million in tax debts lapsed. By 2017, according to internal IRS collection reports, that figure had risen to $8.3 billion, 17 times as much as in 2010. The IRS’ ability to investigate criminals has atrophied as well.
> the reduction results in at least $3 billion in lost revenue each year.
Is this "shocking"?
In FY2021, the federal government brought in $4.05 trillion dollars. [1]
This means this is less than 1/1000th, or 0.07% of revenue.
The IRS budget is $12 billion dollars, and it was previously $14 billion, or $2 billion more [2]. What you're saying is that we lost $1 billion while managing to reduce the IRS workforce (and the number of people hassled by tax audits) by 30%. That sounds like a great deal.
Because they are constrained by Congress and lobbyists. We'll never be rid of TurboTax or HR Block :(
from
When the $10k (~$70k today) reporting threshold for cash deposits was set in the 70s, it was taken to the Supreme Court. Now we all celebrate "compliance." Interesting change.
gaogao
> It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into.
Reading just the title, you might assume this means personal payments too.
willis936
I hope so. Do I need to report rent splitting? What fresh tax hell would that be?
boromi
What was the rationale for adding yet more complexity for us filling taxes...
If you aren't doing anything untoward (like getting paid wages under the table, using a digital payment system and not reporting it[1]), this doesn't change how you file taxes. It's simply a data-point that the IRS will cross-reference, to see if you are being honest with your filing.
[1] If you're doing that, you should, like, stop. I'm not a lawyer and this is not tax advice, but you should probably stop.
CincinnatiMan
If you decide to clean out the junk from your closets, you now have to report that income along with documentation showing you sold it at a loss. Not very fun.
thathndude
The lawyers would tell you to stop, but then go back to their office and do some tax evading.
I’m only sort of joking, the IRS has historically scrutinized attorneys more than other professions.
loeg
This doesn’t affect personal taxes.
jdavis703
A lot of people freelance, landlord or do other activities that are classified as "businesses." So it, actually does personally affect a lot of folks who aren't even full blown businesses.
vorpalhex
Freelance and being a landlord is in fact a business and you do in fact need to pay business taxes as appropriate.
Again, this does not change personal taxes.
asguy
Please explain what a “business tax” is in the US. Personal taxes are definitely affected if you happen to do business as a sole proprietor. They’re even affected if you happen to have an LLC with passthrough taxation.
vorpalhex
If you form an llc, and if you pay passthrough taxes instead then you are perfectly well aware that you are a business and that passthrough taxes are saving you paperwork. If not, your CPA can explain this to you.
BHSPitMonkey
This only makes your tax situation _more_ complex if you're intentionally engaging in tax evasion. If that's your use case, then I guess you have a valid complaint!
jdavis703
It’s an additional form that has to be filed away, and then typed in once all the other tax forms arrive. I have no problem reporting business income. In fact, if the IRS just sent me a (contestable) bill I wouldn’t even complain about the extra paperwork.
et-al
It could if you're a hobbyist buying/selling over $600 worth of used goods. Lots of online communities advise buyers and sellers to use PayPal goods & services for its protection.
Now, folks are on the hook for self-reporting. Previously, the thresholds were $20,000 and 200 transactions, which were maybe too lenient. Had lawmakers just halved the threshold to $10,000, I don't think most people would care. The $600 is too low, e.g. guitars easily fetch a grand, and Leica M bodies are easily over that.
Also, what are Nancy Pelosi's stock gains compared to any folks that might have been not reporting their illicit <$20k income?
cdjk
Want to know what’s even more fun? Since 2018 if you have income from a hobby you are not allowed to deduct any expenses from it, but do need to pay taxes on any income. So if you make a bit of money from photography, and buy and sell a bunch of camera gear, you you taxes on all the camera gear you sold even if it’s sold at a loss.
Spivak
Wait this seems totally logical. Imagine if you could deduct the cost of your car because you used it to drive to a photography shoot once. Or deduct the cost of your personal laptop because you used it for photo editing.
This is basically the separation that sole proprietorships have to go through. Stuff that is exclusively used for your business is deductible, anything for personal use isn't.
Talanes
> Stuff that is exclusively used for your business is deductible, anything for personal use isn't.
I think you're working from a different set of assumptions than GP. They were specifically contending that exclusive expenses could not be deducted, even if the overall net value of transactions is negative (because it's not a business, but just a partial recovery of hobby expenditures.)
cdjk
It’s more like having to pay taxes on the money you get when you sell your car even though you sold it for less than you paid.
MeinBlutIstBlau
Spivak
This only applies to business transactions so just continue doing what everyone does right now which is mark your purchases as personal with an innocuous comment like “taco Tuesday” or for larger purchases “sorry I dropped your laptop.”
Like I’m not the IRS, if some small artist on TikTok wants to commit tax fraud by not reporting my purchases or charging sales tax that’s on them. I’m not gonna narc.
fermentation
Does this need to be done for things like splitting rent? I'm charged the full amount monthly and my partner sends half to me.
ne0flex
I was regarding comments on Reddit regarding this. One person from California gave an anecdote from a few years ago saying he would pay rent from his account and his roommate would give him their half in cash. He ended up getting flagged by the IRS for having $8K in deposits. He tried to dispute with the IRS, showing rent receipts and deposits, but he still ended up having to pay taxes on the $8K in addition to penalties.
I'd imagine some similar situations will crop up with this change. (Let's face it, the IRS will probably be looking at all transactions and not just those marked as business transactions.)
vorpalhex
Your landlord will be in trouble if they are not reporting your payment. As you are just splitting a payment you would mark it as personal.
stjohnswarts
Keep all your paperwork, the tax man will be knocking otherwise.
alx__
I will continue to use emojis then
chrismcb
But you have no protections if you do that
refurb
First off the deluge of data the IRS will get means they won’t be reviewing all of it.
More importantly, is this just an example of regulatory capture by the payment platforms? I used to pay my landlord rent through PayPal, “friends and family” no fee. Now PayPal will ask if that’s a business transaction? (Which I recognize it is, but now it’s a legal requirement to tell PayPal?)
MeinBlutIstBlau
tzs
> A tax law that takes effect in January will require third-party payment processors like PayPal, Venmo and Cash App to report a user’s business transactions to the Internal Revenue Service if they exceed $600 in a year.
How about Zelle? Did the article just fail to mention it, or is Zelle not considered to be a third-party payment processor since it is offered by the banks themselves?
thethimble
This law applies to business transactions only - not personal transactions. Presumable you can’t Zelle a business.
tzs
Businesses can use Zelle at several banks, including Bank of America, Chase, Citi, U.S. Bank, and Wells Fargo.
aaomidi
I feel like I'm the only progressive that wants a decrease in taxes.
Seriously I don't want anyone making under 100K to pay taxes. Heck maybe under 150K.
We have so much fucking money in this govt that we seriously don't need more taxes. Let's use the money we have to make shit better for people first, before we ask them to give up more of their $€£¥
oldstrangers
You can allow those making under 100k to pay a lot less in taxes by making the ultra rich pay a lot more in taxes. Pretty simple solution.
aaomidi
I'm just tired of spending so much money on stupid shit (we're spending more by the govt on healthcare per capita than like, every other country??)
More taxes isn't going to make that better :(
stjohnswarts
I sinking it all in equities and real estate so they can hide it and not pay taxes on it.
stjohnswarts
Mine are approaching 40% when you look at the overall tax burden, how much do they want?? I agree with you.
stjohnswarts
This is the kind of garbage that pushes me towards libertarianism as the years progress. What's the point of electing democrats if their main concern is putting more onerous paperwork on the lower classes while the elite still make only laws that are to their benefit. I personally think we have a right not to be monitored in everything we do, and we are assumed to be criminals and have to file paperwork to proved that we aren't. It's getting entirely ridiculous.
obblekk
This only applies to “business” transactions and the labels are largely self reported.
> Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law.
This effectively guarantees self reporting obligation (even if the buyer reports it as a commercial transaction).
rpowers
This is fantastic news as my wife has been complaining about scalpers on apps like Mercari and Poshmark.
bredren
Can you explain more about what your wife means by scalpers on these services?
vngzs
People who buy and resell collectibles or clothing for considerable profit with no intention of using the items themselves. The term is frequently associated with concert tickets, where people with no intent of going to a concert will drive the ticket prices up and skim a profit.
bredren
I see. I’m familiar with its use in ticketing. I’ve noticed arbitrage opportunity in some markets where items are sold far below market value because they are intended for a neighbor or just that community.
Is your wife seeing low priced items sourced from those marketplaces, or sold on those marketplaces?
hunterb123
This was known Democrat policy for awhile. Why is everyone acting surprised?
hffft
imwillofficial
Meanwhile, the ultra rich get ultra richer
hamandcheese
> The change was made when the American Rescue Plan was passed in March 2021.
This is why people fucking hate congress.
BurningFrog
The trend toward passing one 3000 page bill a year that no one knows what it contains isn't awesome.
hunterb123
It was known and it was a big issue among Republicans. I don't know why the left supported it or didn't know about it.
edit: it seems many people truly didn't know about this. It was widely reported in right-leaning news before the American Rescue Bill passed.
asdff
Pork isn't a new concept in politics.
ur-whale
> This is why people fucking hate congress.
Wholeheartedly agree.
And to go one step further: how many percent Americans would have voted yes to something like this if they had been asked directly?
Representative democracy is utterly broken.
HWR_14
> how many percent Americans would have voted yes to something like this if they had been asked directly?
That seems an unfair burden. Many laws cover complex matters and the average American cannot be expected to know the pros and cons of every bill. I like clean water, for instance, but my opinion on what that means isn't well developed enough to vote on laws on exactly what should be permitted.
twofornone
>Many laws cover complex matters and the average American cannot be expected to know the pros and cons of every bill
Our lawmakers aren't exactly subject matter experts either. And their SMEs are probably often just lobbyists.
HWR_14
This is a fair complaint, and I would welcome a better way for the lawmakers to obtain SME input.
andreasley
Describing the right to influence legislation as a burden seems exceptionally strange to me.
Maybe that's because I've always lived in a direct democracy where it's commonplace to propose or challenge new laws, and while engaging in that process does require a few hours every now and then, I've always felt that's more than worth it.
HWR_14
I'm not saying that the right to influence legislation is a burden. I'm saying, asking, poll-style, how many Americans would vote for X without any education or informed debate is a bad argument.
By all means, I very much support citizen led initiatives (and there have been some excellent ones), but not out of the blue as an after the fact evaluation of a law.
vkou
> Representative democracy is utterly broken.
It's the worst form of government, except all the others that have ever been tried.
You are right on one count, though, there are a lot of broken aspects to this particular flavor of representative democracy. It's the sort of thing that happens when you keep version 1 running in production for 250 years, with limited ability to patch it.
ur-whale
> It's the worst form of government, except all the others that have ever been tried.
I disagree. There are places where direct democracy works quite well and has for a very long time.
The US certainly isn't one of them.
vkou
Such as? The only example I can think of where this works is trade unions, who have a rather limited mandate.
brg
There is only one direct democracy in the world, and it is Switzerland. What are other examples?
This $600 threshold corresponds to the point where a business would have to issue a 1099 to a contractor. It makes sense to have this sort of symmetry - is there a reason you think paying using an app should have different reporting thresholds than using other payment options?
OminousWeapons
Well you can wire up to 10K without an SAR being sent to the government, so perhaps that should be the number instead?
MerelyMortal
Don't worry, the SAR limit will be lowered to $600 to correspond with everything else.
stjohnswarts
The way I think is that more surveillance should be removed rather than added. The burden of them tracking your money should be on the IRS not assuming every American who conducts a money transaction on PayPal and Venmo is criminal until proven innocent. Look at how much authoritarian and authoritarian leaning governments love digital transactions and decide if that's the direction we should be headed.
CamperBob2
Hi, I'm from Merriam-Webster. We need to add "Overton Window" to the 2023 edition. OK if we cite your post, not just as an example, but as the literal definition?
ejstronge
I’m not sure why you cite an Overton Window - this literally only relates to business payments, just like the 1099 threshold.
CamperBob2
When the $600 limit was introduced, some of us objected. We were told it was "just for businesses and contractors," and furthermore that "The slippery slope argument is a logical fallacy."
So, yeah. This only seems normal because we accepted the last overly-intrusive measure.
HWR_14
Why is paperwork optimization an issue for you? Tax cheats literally are stealing from the government, which increases the debt or taxes the rest of us have to pay. The only issue I have is that the IRS cannot send me a draft tax return I can accept or reject based on all the data they collect.
dylan604
People using loopholes because they have enough money to pay shit tons of money just to lower their tax liability to the point they pay less taxes than someone reading this post is total bullshit as well.
jksmith
Feel free to comply if you like. If you don't like, there are more optimal places to live than the US. Just have to deal with that nasty US tax issue. Becoming an Eritrean citizen won't help.
HWR_14
If people want to give up US citizenship and move away, fine by me. I don't particularly think that automated record keeping is significant enough (or even a negative) to drive you to leave the country.
stjohnswarts
It was my theory why Trump won. Sure some of his people are racists but I knew a ton of independents who voted for him because they thought he might shake it up a bit in Washington in a populist way. I tried to convince them otherwise, but he certainly did shake things up, as in the foundations of democracy.
Here (Iceland) it's free to transfer money between individuals via your bank. You simply give them your ID number and bank account and it's done instantly. US Banks are leagues more advanced than the ones here, and the only reason services like this exist is so that banks can directly or indirectly make money from them. People in the US need to demand better from their banking institutions.
The US government has always had the opportunity to come out with a digital equivalent to cash, that they policed rather than selectively hold private entities liable.
Supposedly, this is coming out soon called FedNow.
https://www.federalreserve.gov/paymentsystems/fednow_about.h...
Electronic money transfer should be a government utility, subject to courts rather than private business’ whims. Although, the US government does like sitting on the sideline and maintaining plausible deniability.
In Australia, a regular person with knowledge of my bank code (BSB) and my account ID isn't able to withdraw money from my account, but they can send me money. It's very low risk.
For the last few years I've been able to associate a phone number or email address to my bank using PayID[1] which eliminates even that.
The BSB + Account ID can be used to set up direct debits, it's intended for ongoing/regular payments like utilities/rent/etc. Because it requires a fair bit of paperwork/infrastructure to get registered in that system, I don't think anyone would be able to get away with scamming using it for long.
[1] https://payid.com.au/
> If your bank or credit union does not yet offer Zelle®, your weekly send limit is $500. Please note that you cannot request to increase or decrease your send limit.
https://www.zellepay.com/faq/there-limit-how-much-money-i-ca...
In addition, if your financial institution is not partnered with Zelle, you can't send money to anyone whose financial institution is also not partnered with Zelle:
> If your bank or credit union does NOT offer Zelle®- The person you want to send money to, or receive money from, must have access to Zelle® through their bank or credit union.
https://www.zellepay.com/faq/who-can-i-send-money-zelle
After a few phone calls with their customer service department, it was evident that it was not going to work out. ALSO, they had no way to 'refund' that person the sizable amount of money beyond waiting the 2 weeks or so it takes for that money to be 'unclaimed', and thus reverting to the originating account.
So, for 2 weeks, thousands of dollars were 'stuck' in no mans land.
It all resolved out, when the timeframes were hit, and transactions reversed, but it still boggles my mind that they do not have a method beyond this when such cases arise.
Latency is getting better and I think 2022 is the year a big change to the ACH system is getting rolled out that should decrease that wait time to less than 24 hours for most transactions.
But you'll still have all of these companies vying for the in-between so they can make money investing transitional funds. Now you see services like Cash.app moving to a more bank-like structure with a debit card and Apple Pay, so they can keep that money in their system and they can continue to do stuff with it.
I agree with your broad point though. This should be easier in the US.
The problem is that (1) most consumers don't know this is a thing, and (2) as you said, the UX of sending money through Venmo is generally far better than having to log in to your institution's mobile banking app, get past MFA, and then find the option to send money to someone. Zelle also lacks the concept of requesting money (I think), and that feature is a big QOL advantage in my experience.
By owning both ends of the transaction, the UX of Venmo is so much better it isn't even funny. I will never use Zelle again if I can help it. Zelle's limitations (set by each bank) are as bad as Venmo's (eg can only send $2,000/month to a recipient), at which point I might as well just keep using Venmo.
Hopefully, FedNow Instant Payments will force banks to provide better service and remove the need for workarounds like Venmo.
Yes Zelle is so bad when it messes up. I hate it so much.
My bank has no effective method for me to initiate a transfer to another account in any rapid fashion that is not my own account. Even to send to an account at the same bank both parties must be on the phone with the bank at the same time. I get more value out of using Cashapp as a bank by setting up my direct deposit to go to Cashapp. Most banks I use just outright suck, and I am tired of how much they tie any activity to my own physical existence. It has only ever been a barrier to my own productivity.
It's pretty easy to hop to a different institution for checking/savings if the current one isn't working out for you.
I think most countries have solved this problem by now - i.e instant transfer through apps. Seems like every country has their own service. Would be nice to get some larger unified version - that'd be cool.
There's SEPA and SEPA Instant for the eurozone, and they are awesome ( free, fast, reliable, only an IBAN required).
You can also just send the money to their bank account if you really wanted to, but nobody actually likes doing that when you can use the protections (however imperfect) these services provide.
Interac E-Transfer minimums are 0.01$. Money is going straight into my checking accounts.
I agree with the minimums and send time. It’s ridiculous that a transfer I make every week to my wife takes 30 mins to complete. Slower than Bitcoin.
Yes, but what’s the average Icelander’s monthly bank account fee?
In the US, it’s a bit fat zero.
Another fun fact: pretty much everyone here pays off their credit card every month.
The bank will close your account if you do not.
Of course there are exceptions, but this is the general rule.
(if you need money the bank will lend it to you and help you arrange payments)
https://files.consumerfinance.gov/f/201407_cfpb_report_data-... (PDF, page 9)
While there are fee-free checking accounts in the U.S., many of the largest banks only offer paid checking accounts that qualify for a monthly fee waiver if certain requirements (such as an average/minimum daily balance, an amount of monthly direct deposits, and/or a number of monthly debit card transactions) are met. However, U.S. credit unions tend to have more consumer-friendly offerings.
It seems you get what you pay for.
Was hard to find any info. The Only Iceland bank I did find after searching “monthly bank account fees in Iceland” had a link to a PDF of their fees in Icelandic only (my phone won’t translate pdfs), and that was linked from their English page for newcomers.
https://www.islandsbanki.is/en/article/price-and-interest
It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into.
Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law.
This is the part I don't get. If I sell old used phones or laptops, never at a profit, how does ebay know I'm not profiting? They just report anyway.
And before someone blurb out the usual crap about pay your taxes and that shit. 1. This is $600 total per year (from what I can gather) and not $600 per transaction. 2. People who do not invoice and not pay taxes on these amounts, are usually working on thin sidelines. Most legitimate businesses/transactions will require an invoice. and 3. This will kill any flexibility of doing small work and only becoming regularized once it's worth it. If you made $800 of freelance work, is that really worth the headaches of reporting it? Might as well not do the work and avoid the paperwork involved with that.
And let's not talk about all the confusion that is going to arise from people, family and friends transferring money to one another. If really enforced, this is a clusterfuck for those making less than minimum wage and doing casual side hassles.
The funny thing is that many people (reading reddit/news sites) think this is a good idea because it'll catch the "tax evaders".
> "Yellen has argued that the move will reduce the amount hidden by billionaires"
What a circus we are living in.
>It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall in
> It’s important to note that this change — which will be applied during 2022’s tax year and moving forward — applies only to payments received for sales of goods and services, and not to friends and family payments.
[0]: https://finance.yahoo.com/news/tax-law-sell-more-600-1548205...
I think this is the most relevant line. Goods and services is a specific opt-in tag. All the other quotes left it unclear if the completely fanciful descriptions that get put into Venmo payments were actually going to become tax-reporting criteria.
You’ve always had to report freelance work, even before this policy.
It’s not that difficult at all. Any of the tax prep software out there will walk you through it.
It’s trivially easy to report small jobs. $800 would definitely be worth keeping the documentation and typing a few numbers into the tax software at the end of the year.
> And before someone blurb out the usual crap about pay your taxes and that shit.
People who make below the taxable rate are not in a position to use TurboTax, understand the different forms or read regulation. They do not pay a tax for a reason (too little income) and I think they should be exonerated from these forms because of the reasons that made them make less than the taxable rate (they don't understand the forms). Not everyone doing freelance work is a software engineer.
>It does not apply if a person is using the service to send someone a gift or pay someone back for buying a dinner. According to some payment providers, they will be asking for more information about transactions to see which category the transactions fall into.
Instead, I now have to file a W2 for my new nanny, complicating my taxes and hers. After my nanny takes the standard deduction, they’ll collect minimal additional taxes. A wasteful policy that just increases governmental overreach.
Also, notice that my nanny’s total income is less than the standard deduction. She’s ultimately paying no taxes, just like my gardener and house cleaner.
If the democrats want to increase tax revenue, pass laws that reward people for turning in under reporting of inter-generational wealth transfer - like Trump received. If accountants and lawyers can claim 10% by turning in their customer’s fraudulent tax schemes, the country will collect substantially more than this legislation.
The game is rigged, use every opportunity you have to break the rules to get ahead because the people who lord over us definitely are.
The TAM of unpaid taxes Has to be substantially larger when it comes to high earners
Ultra high earners can afford sufficient lawyers to turn it into a THX-1138 situation for the IRS.
Certain elements in Congress have encouraged this by doing everything they can to cut the IRS budget. From 2010-2018 the budget was cut sufficiently to cause the IRS to cut its enforcement staff by 30%.
Here's an article about it [1]. Some of the numbers in there are shocking. E.g.,
> Without enough staff, the IRS has slashed even basic functions. It has drastically pulled back from pursuing people who don’t bother filing their tax returns. New investigations of “nonfilers,” as they’re called, dropped from 2.4 million in 2011 to 362,000 last year. According to the inspector general for the IRS, the reduction results in at least $3 billion in lost revenue each year. Meanwhile, collections from people who do file but don’t pay have plummeted. Tax obligations expire after 10 years if the IRS doesn’t pursue them. Such expirations were relatively infrequent before the budget cuts began. In 2010, $482 million in tax debts lapsed. By 2017, according to internal IRS collection reports, that figure had risen to $8.3 billion, 17 times as much as in 2010. The IRS’ ability to investigate criminals has atrophied as well.
[1] https://www.propublica.org/article/how-the-irs-was-gutted
Is this "shocking"?
In FY2021, the federal government brought in $4.05 trillion dollars. [1]
This means this is less than 1/1000th, or 0.07% of revenue.
The IRS budget is $12 billion dollars, and it was previously $14 billion, or $2 billion more [2]. What you're saying is that we lost $1 billion while managing to reduce the IRS workforce (and the number of people hassled by tax audits) by 30%. That sounds like a great deal.
[1] https://datalab.usaspending.gov/americas-finance-guide/reven... [2] https://www.irs.gov/statistics/irs-budget-and-workforce
Reading just the title, you might assume this means personal payments too.
[1] If you're doing that, you should, like, stop. I'm not a lawyer and this is not tax advice, but you should probably stop.
I’m only sort of joking, the IRS has historically scrutinized attorneys more than other professions.
Again, this does not change personal taxes.
Now, folks are on the hook for self-reporting. Previously, the thresholds were $20,000 and 200 transactions, which were maybe too lenient. Had lawmakers just halved the threshold to $10,000, I don't think most people would care. The $600 is too low, e.g. guitars easily fetch a grand, and Leica M bodies are easily over that.
Also, what are Nancy Pelosi's stock gains compared to any folks that might have been not reporting their illicit <$20k income?
This is basically the separation that sole proprietorships have to go through. Stuff that is exclusively used for your business is deductible, anything for personal use isn't.
I think you're working from a different set of assumptions than GP. They were specifically contending that exclusive expenses could not be deducted, even if the overall net value of transactions is negative (because it's not a business, but just a partial recovery of hobby expenditures.)
Like I’m not the IRS, if some small artist on TikTok wants to commit tax fraud by not reporting my purchases or charging sales tax that’s on them. I’m not gonna narc.
I'd imagine some similar situations will crop up with this change. (Let's face it, the IRS will probably be looking at all transactions and not just those marked as business transactions.)
More importantly, is this just an example of regulatory capture by the payment platforms? I used to pay my landlord rent through PayPal, “friends and family” no fee. Now PayPal will ask if that’s a business transaction? (Which I recognize it is, but now it’s a legal requirement to tell PayPal?)
How about Zelle? Did the article just fail to mention it, or is Zelle not considered to be a third-party payment processor since it is offered by the banks themselves?
Seriously I don't want anyone making under 100K to pay taxes. Heck maybe under 150K.
We have so much fucking money in this govt that we seriously don't need more taxes. Let's use the money we have to make shit better for people first, before we ask them to give up more of their $€£¥
More taxes isn't going to make that better :(
> Also, if you sell something at a loss; for instance, you purchased a bike for $400 and sold it for $300, the amount is not subject to the new law.
This effectively guarantees self reporting obligation (even if the buyer reports it as a commercial transaction).
Is your wife seeing low priced items sourced from those marketplaces, or sold on those marketplaces?
This is why people fucking hate congress.
edit: it seems many people truly didn't know about this. It was widely reported in right-leaning news before the American Rescue Bill passed.
Wholeheartedly agree.
And to go one step further: how many percent Americans would have voted yes to something like this if they had been asked directly?
Representative democracy is utterly broken.
That seems an unfair burden. Many laws cover complex matters and the average American cannot be expected to know the pros and cons of every bill. I like clean water, for instance, but my opinion on what that means isn't well developed enough to vote on laws on exactly what should be permitted.
Our lawmakers aren't exactly subject matter experts either. And their SMEs are probably often just lobbyists.
Maybe that's because I've always lived in a direct democracy where it's commonplace to propose or challenge new laws, and while engaging in that process does require a few hours every now and then, I've always felt that's more than worth it.
By all means, I very much support citizen led initiatives (and there have been some excellent ones), but not out of the blue as an after the fact evaluation of a law.
It's the worst form of government, except all the others that have ever been tried.
You are right on one count, though, there are a lot of broken aspects to this particular flavor of representative democracy. It's the sort of thing that happens when you keep version 1 running in production for 250 years, with limited ability to patch it.
I disagree. There are places where direct democracy works quite well and has for a very long time.
The US certainly isn't one of them.
The patching process is called amendments. 17th put lobbyists in control. https://www.senate.gov/artandhistory/history/common/generic/...
So we should just try new ones then?
https://ballotpedia.org/American_Rescue_Plan_Act_of_2021
So, yeah. This only seems normal because we accepted the last overly-intrusive measure.