09/09/2023
A recent IRS policy change has sent shockwaves through the gig economy and person-to-person payment platforms. As of 2023, apps like Venmo, Cash App, Zelle, and PayPal must issue 1099-K tax forms for accounts with over $600 in transactions.
Previously, the 1099-K threshold was over $20,000 and 200 transactions. Under the old rules, only a few Americans were reported to the IRS and received tax forms. Now millions of Americans earning side income will face new tax paperwork and additional obligations.
The IRS change is intended to increase tax compliance for online income. But it places a huge burden on small-scale earners already struggling with inflation and rising costs. And these new rules could end up driving more cash and ATM transactions.
How New IRS Rules Impact Contractors, Gig Workers
Under the updated reporting requirements, anyone receiving income through third-party payment apps over $600 will get a 1099-K form in January. The form and associated income must be claimed on tax returns filed in April.
For the 49% of gig workers supplementing a full-time job, the extra documentation and tax prep complicates what used to be easy side earnings. The increased hassle may discourage gig economy participation and further affect some consumers’ economic participation.
Gifts, reimbursements, payments to family and friends, and selling items at a loss are not included in the reporting requirements. But, in many cases, it is up to the individual to distinguish these transactions on their tax forms when they report their new 1099-K.
Essentially all Americans, businesses, and individuals alike must now track payments closely to handle their 1099-K paperwork. This presents substantial time, energy, and potential tax expense.
The Cash and ATM Resurgence
To avoid the administrative headache of 1099-Ks, gig economy workers are shifting back to cash transactions. Because requesting payment in physical currency circumvents online applications and the need for income reporting.
From local contractors to rideshare drivers, service providers across industries now prefer cash. And their customers need easy access to cash withdrawals to meet those demands.
This places a rising value on on-site ATMs – as more consumers visit ATMs to get cash for goods and services, increasingly provided through the gig economy. Locations with convenient cash withdrawal access (retail ATMs) will bring in additional foot traffic.
Businesses Get Onboard the ATM Trend
Savvy merchants are installing ATMs on-site to accommodate customers (and workers) who prefer cash. And the new additions are helping to capture revenue from withdrawal fees while encouraging additional purchases. Between increased foot traffic, added revenue, and improved customer satisfaction, ATMs are a winning investment.
