Growing Your Income

Democrats push to loosen gig worker tax reporting threshold

Democrats push to loosen gig worker tax reporting threshold

A group of vulnerable Democrats is pressing for a higher earnings threshold to trigger tax reporting requirements for gig workers and online sellers, arguing that the lower limit that began this year could lead to people paying more tax than they owe.

Reps. Chris Pappas of New Hampshire and Cindy Axne of Iowa, along with New Sens. Maggie Hassan of New Hampshire and Kyrsten Sinema of Arizona, plan to introduce legislation Tuesday that would provide some relief from the policy change that Democrats enacted a year ago to help pay for their COVID-19 aid package.

That law slashed the threshold for receiving a tax form based on third-party network transactions, a category that includes people who sell on sites like eBay or Etsy, drive for Uber or Lyft, host through Airbnb or collect business payments through Venmo and PayPal. Many are part of the booming gig economy fueled by the growth of apps like Uber, Grubhub and TaskRabbit.

Previously, reporting was triggered when someone received payments at least 200 times per year totaling a minimum of $20,000. The March 2021 pandemic aid law cut the limit down to only $600 in payments starting this year, a move estimated to generate about $8.4 billion in tax revenue through 2031.

The measure from Pappas, Axne, Hassan and Sinema would lift the reporting threshold to $5,000 retroactive to the start of 2022 and require plain-language explanations to accompany the forms.