If you’ve been checking your news feed this week, you’ve likely seen the alarmist headlines: “IRS to monitor all bank transfers over $600 starting Monday.” For anyone who regularly Venmos a roommate for rent or Zelles a grandchild for a birthday, it sounds like a massive invasion of privacy. But as we navigate the start of the 2026 tax season, it’s time to separate the “internet rumors” from the actual law.
Here is the truth: The controversial $600 reporting threshold that was supposed to hit payment apps and bank accounts has been officially rolled back by the One Big Beautiful Bill Act (OBBBA). If you were worried that a simple $601 transfer would trigger an automatic audit this Monday, you can breathe a sigh of relief. However, there are new rules in effect for 2026 that change how the IRS tracks your side-hustle income. Here is the real story behind the “crackdown.”
The $600 Rule is Dead (For Now)
The plan to force apps like Venmo, PayPal, and CashApp to report every user with over $600 in transactions was originally part of the 2021 American Rescue Plan. But after years of delays and public outcry, the OBBBA has retroactively raised that limit. According to the IRS Newsroom, for the 2026 tax year, the threshold for a Form 1099-K has reverted to the old standard: $20,000 in payments AND 200 transactions. This means unless you are a high-volume power-seller, your casual personal transfers are once again “invisible” to the 1099-K reporting system.
The New $2,000 “Non-Employee” Threshold
While the $600 rule for payment apps was rolled back, the OBBBA did change the rules for business owners. Starting January 1, 2026, the threshold for Form 1099-NEC (Non-Employee Compensation) and Form 1099-MISC has actually increased from $600 to $2,000. As reported by Littler Mendelson, this is a huge win for seniors with small side businesses. You no longer have to issue (or receive) a tax form for small jobs under $2,000. This $2,000 limit will now be adjusted for inflation every year, finally ending the $600 rule that had been stuck in place since the 1950s.
The 1% “Remittance Tax” on Cash Transfers
There is one group that will see a change this Monday: those sending cash abroad. Under Section 4475 of the OBBBA, a new 1% Federal Excise Tax now applies to international money transfers where the sender uses cash, a money order, or a cashier’s check. According to IRS Publication 15, if you go to a retail storefront to wire $1,000 in cash to a relative outside the U.S., the provider is required to collect a $10 tax. Digital transfers from your bank account (ACH or wire) remain exempt from this tax. The “crackdown” is specifically targeting physical cash-based remittances, not your standard banking app transfers.
Personal vs. Business: The “Friends and Family” Rule
The most important thing to remember this Monday is that the IRS has no interest in your personal life. Splitting a dinner bill, reimbursing a friend for concert tickets, or sending a gift to a family member is not taxable income. As TaxAct points out, you should always ensure your personal transfers are marked as “Friends and Family” in your app settings. This ensures the transaction is never flagged as a business sale, regardless of whether the amount is $60 or $6,000.
Fact-Checking the “Monday” Rumor
The “Monday” deadline you’re seeing online is largely a misunderstanding of the official opening of the 2026 filing season (which is January 26th). While the IRS is becoming more digital, they are not monitoring your every latte purchase. By raising the reporting threshold to $2,000 and rolling back the $600 1099-K rule, the OBBBA has actually reduced the amount of paperwork for the average senior.
Have you noticed your bank or payment app asking for more info lately, or were you worried about the $600 rumor? Leave a comment below and let’s set the record straight!
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