ATMs in the World of Cash App Taxes
A number of cash apps or third-party payment networks such as PayPal, Google Pay, Cash App, Zelle, and Stripe give small businesses easy means to receive payments from their customers. However, while customers don’t have to pay additional fees, business owners need to account not just for fees, but for taxes as well. Consequently, one might see an increase in cash transactions when it comes to small businesses, which would then require more ATM transactions.
How Taxes on Cash Apps Work
There are no applicable taxes for people who use third-party payment networks only for personal reasons. However, business owners as well as individuals who receive $600 or more as payments for goods and services through a course of a taxation year need to know how Form 1099-K works. Before the implementation of this change on January 1, 2022, Form 1099-K came into effect only in case you received 200 or more payments valued at a total of $20,000 or more in a taxation year.
What is Form 1099-K?
Form 1099-K gives the IRS details about business payments that one may receive via third-party payment networks. The payment processing company/companies you partner with send you this form. What helps is that you don’t have to file these forms on your own, because the IRS also receives copies from your service provider.
1099-K Deductions
It’s possible to deduct some types of expenses based on the information present in a Form 1099-K. These may come in the form of merchant fees as well as costs related to advertising, internet services, web hosting, and running a home office. However, this would require added work.
Possible Drawbacks
A possible drawback is that a Form 1099-K might contain taxable and non-taxable transactions. As a result, you might want to consider keeping separate accounts for personal and business purposes. In addition, you might end up receiving a Form 1099-K in error, as that might be the case if someone sends you a tidy sum of money as a gift through a cash app. While it’s possible to report such mistakes, you’ll need to contact the payment network in question.
The Effect on Independent ATM Deployers (IADs)
Given that the IRS will scrutinize business payments made through third-party payment networks once they hit the $600 mark, there’s a possibility that several small businesses might stop accepting payments through this method and opt for cash instead. Besides, this may also be the case with teenagers who earn money by working part-time as well as freelancers. This would require customers to make cash payments, which, in turn, would result in increased use of ATMs.
In addition, there might also be a higher demand for ATMs from small business owners, which would bode well for ATM placement companies.
Conclusion
Small business owners who need to deal with cash app taxes might start rethinking their strategies when it comes to accepting payments via third-party payment networks. Going forward, there’s an increased possibility that the need for cash will increase, and this might also lead to the installation of more new ATMs at retail locations. However, if you feel you might benefit by getting an ATM for your business, it’s important that you partner with a reliable service provider.
