India Set to Reach $100 Billion in Remittances

Brexit’s impact on remittance has been felt throughout the world. Last year, migrant workers in the UK sent home an approximate $24.9bn making it the fourth-largest source of remittances in the world. This year, the World Bank reported that the stirling has shrunk to 14.6 per cent and 13.2 per cent against the dollar and euro respectively. This means that people back home are receiving less for their money. The savings of migrant workers are thousands of euros less than they used to be before the Brexit vote. A weak pound means a drop in remittances, with migrants working harder and sacrificing other savings to make up for that decline.Impact of Brexit on Remittance-Receiving CountriesThe repercussions go way beyond individuals and families having to tighten their belts. The native countries of these recipients suffer, too. For 25 countries, remittances provides more than 10% of their GDP.Eastern EuropePoland, Hungary, Latvia, Slovakia, Czech Republic and other so-called EU8 countries that joined the EU in 2004 have become the second largest recipients of remittance flow from the U.K. after Germany. Remittance makes up between 3-6 per cent of GDP for many of these nations.In Hungary, the Magyar Nemzet reported that the GBP declined in value roughly HUF 70 since the UK voted to leave the European Union in June, and by HUF 100 since last November. Further deviation was expected by the end of this year. Remittances make up about USD 3.6 billion, or three percent of the total GDP of Hungary's economy, according to a report in Hungarian business daily Világgazdaság. In 2015, Time Magazine reported that Hungarians in the UK send back an annual average of USD 7,700 per economic migrant. The result could be several billions of forints in losses, according to the Magyar Nemzet report.Other Regions and Developing CountriesNigeria, India and Pakistan list among the top three countries that receive remittance from Britain. In 2015, Nigeria received almost $4 billion, India received $3.6 billion and Pakistan just over $1 billion. Each of these regions have fragile economies, and millions of people who depend heavily on remittance of overseas workers for support. Each has now have to had to acclimate themselves to a devalued pound and have come to expect a lot less than they used to.Although other countries such as Bangladesh, Pakistan and Nepal received less remittance from Britain than India, their more fragile economies make them more dependent on the remittance for substance. Respectively, remittance from UK makes up about 8.5 per cent, 7 per cent and 29 per cent of each of these countries GDP, respectively.In countries such as these, remittance pays for education, startups and healthcare. It, also, lifts families and communities out of poverty and spurs development. Kenya is another example of a region that lost millions of dollars in remittance, according to the UK-based think tank Overseas Development Institute (ODI) in September.The list of countries that suffered because of Britain’s devalued currency continues.The Future?Some experts believe that the fall of the stirling will prompt more migrant workers to leave Britain and fewer to move there. Jonathan Portes, an economist at the UK’s National Institute of Economic and Social Research adds that migrant workers may feel less welcomed making them less likely to stay and more likely to tell their friends to keep away.Other research by the UK’s Department for Work and Pensions found that many migrant workers in Britain relocated to healthier economies with stronger currencies during the 2007-09 financial crisis. Experts say that more migrant workers are likely to follow that pattern now.In short, the Center for Global Development predicts a dreary next two years where the UK economy may stagnate leading to a recession that will, further, lower the value of remittances.

The Indian Rupee has closed at a 20-week low against the US dollar. Paired with the unexpected outcome of the US presidential election this past week, the main reasons for dragging the rupee down can be accredited to the strike on black money via demonetization of high-value currency notes and weak industrial output. The US currency, in turn, has strengthened based on speculations that the policies of the US President-elect Donald Trump would be inflationary and lead to a rise in the interest rates, thus impacting foreign money flow to emerging countries like India.Foreign investors withdrew over Rs. 2,350 crore from the stock markets as the US-backed assets are looking more attractive and as a result, the economy is expected to improve in the coming quarters.According to India ratings, the sudden decline in money supply and a simultaneous increase in bank deposits - due to withdrawal of 500 and 1000 rupee notes - will adversely impact consumption demand in the economy. This, coupled with the depreciation of real estate, construction and informal sectors, will further weaken the rupee in the upcoming months. It is very much possible in the upcoming months, as well as even forecasted by many agencies, that US Dollars will become stronger against Indian Rupees. All this means is that the spending power of the NRIs will increase, leading to a rise in the remittance flow to India.Compare. Save. Send Money Home Wisely.TODAY'S BEST RATE USD to INRAdditional ReadingHow will India's Currency Ban Affect NRIs in the USA?How India's currency ban of Rs. 500 & Rs.1000 will affect NRIs?How much Indian Rupees can one carry to India?

Peer-2-peer (P2P) payment apps, also known as money transfer apps or mobile wallets such as Paypal, Venmo, or Cashapp, are popular online payment platforms for business - they are convenient, easy to use, and are highly efficient ways to transfer money. However, with new regulations, using P2P payment apps for business transactions will be subject to taxation in the United States.In this article, we will discuss what is Form 1099-K, who is required to file taxes under the new rule for P2P users, and what information should be included in declaring to the Internal Revenue Service (IRS).New P2P Tax Laws of 2022 in the US SimplifiedLet's first understand the current tax rule to get a broader picture of the changes.For the current or the old tax rule on 1099-K tax returns filed prior to 2022, the IRS has set thresholds as follows: You have received over $20,000 in gross payment in a calendar year, andYou have settled more than 200 transactions in a calendar year.Now, the new tax rule on P2P Apps for calendar years after 2021, the IRS has changed the threshold as follows:You have received a gross payment that exceeds $600, andApplicable on any number of transaction/s.Put simply - you are required to report your earnings on the sale of goods and services if $600 or more was processed through these platforms. If you cross the threshold, the IRS expects the third-party networks in this case the P2P Apps to issue Form 1099-K to you to report payment transactions.Even if you do not receive a 1099-K, you are required to file the earrings in your income tax return. These new P2P tax laws will impact many users such as gig workers, online sellers, self-employed business owners, freelancers, etc.The new taxation rule for third-party payment networks has been implemented under the American Rescue Plan, the $1.9 trillion stimulus package that came into effect in March of last year. The change doesn't impact 2021 taxes but will impact 2022 tax returns filed in 2023.P2P Payment Apps 2022 Tax FAQsWhat Are the New Tax Reporting Requirements?To reiterate, beginning January 2022, if you receive $600 or more payments for goods and services in the current year, through a third-party payment network, such as Venmo, CashApp, or Paypal, your earnings will be reported to the IRS through Form 1099-K sent by the P2P platforms and income tax return.The tax rule only applies to payments received for sales of goods and services and does not include payments to friends and family.Read Comparison between PayPal, Venmo, and Zelle.What Is a Form 1099-K?Form 1099-K, Payment Card, and Third Party Network Transactions is an IRS form used to report payments for goods and services transactions to improve voluntary tax compliance.Payment settlement entities such as debit/credit card companies including PayPal, Venmo, Stripe, Etsy, and others are required by law to file them with the IRS and share copies with the payment recipient.You would receive Form 1099-K by January 31st of the following year if you received payments in the previous calendar year.What Is Included in Form 1099-K?Your Form 1099-K includes the gross amount of all reportable payment transactions, excluding any adjustments for credits, discounts, fees, or refunded amounts.A Form 1099-K will be sent to you from each payment settlement entity from which you received payments in settlement of reportable payment transactions. A reportable payment transaction covers a payment card transaction or a third-party network transaction.The minimum reporting threshold is meant only for transactions settled through a third-party network. There is no threshold for payment card transactions.What Additional Information May Be Required for Form 1099-K?Your third-party payment provider may request tax information such as your Employer Identification Number (EIN), Individual Tax Identification (ITIN), or Social Security Number to report payments on Form 1099-K properly. Once this information is confirmed, your tax forms can be issued without a hassle.If you cross the reporting threshold for the sale of goods and services on the payment apps, the Form 1099-K will be issued to you at the beginning of the 2023 tax period, and a copy of it will be sent to the IRS.You can also download account statements for any reporting obligations, even if payments received are within $600. If needed, seek a licensed tax expert to assist you.How Can Information on Form 1099-K Be Used for Income Tax Returns?You must report any income listed on your Form 1099-K from your business on your income tax return.Since Form 1099-K may include both taxable and nontaxable income, keeping good records is very crucial. If you receive money from a nontaxable source, such as money received as gift or splitting bills, you need not report on your tax return.Also, make sure that your business books and records mirror your business income. Business income is generally referred to as the gross receipts on income tax returns. Your business income can be in the form of cash, checks, and debit/credit card payments.So consider the amounts shown on Form 1099-K, along with the other payments received, when calculating gross receipts for your income tax return.How to Maintain a Good Record for Tax Reporting?Record keeping is vital for accurate tax reporting. If you receive the Form 1099-K at year-end, you can check your accounting records to see if the income reported to the IRS is accurate. Even if you don't receive Form 1099-K, the income still needs to be reported on your tax return.Go for a record-keeping system that reflects your income and expenses. Also include accounting and payroll records, bank statements, receipts, tax forms, returns, and relevant business-related financial records.Most importantly, set up a business account if you are receiving business payments through a P2P payment platform.Maintain a separate account for business and personal transactions.Having a separate business account and keeping good records can be practical when showing both taxable and nontaxable income sources if the IRS audits your income tax return.If you pay your business expenses using any of the payment platforms, get the invoice or a receipt from the vendor or the contractor to record the amount paid and the details of the business expense. This will serve as evidence for your expenses if the IRS questions the legitimacy of your business expenses.1099-K Guide: What if Multiple Payment Platforms Are Used?The IRS tax rules are the same for all the P2P platforms, including PayPal, Stripe, or Venmo, though it might be enforced differently. If you are receiving business payments from multiple platforms and the collective amounts from sales on these platforms exceed $600, consider speaking to a licensed tax professional for best practices.You can find the contact details on Form 1099-K if you have any questions on the matter.Are Transactions on Zelle Taxable?While this rule applies to most third-party payment networks, Zelle is not included. Only the P2P payment companies that deal with the settlement of funds in business transactions are required to issue 1099 forms to users. Zelle doesn't process payments but facilitates communication via messages between a financial institution and people making the payments.Zelle states that it does not report transactions made on its Network to the IRS, even if the total is more than $600. The new law to provide forms 1099K for information reporting does not apply to the Zelle Network, it added.Will I Be Taxed in the United States for Sending Money Abroad Through a Payment App?Most digital wallets or P2P payment platforms do not support international money transfers. The best way to send money from the U.S. internationally is through online money transfer companies such as Xe money transfer, Remitly, and Western Union.In general, when you send money from the United States, the first $15,000 USD, per recipient will be exempt from taxes by the IRS under the Gift Tax policy. Although sending money as a gift is not taxable, you may need to report it to the IRS. In conclusion, from the beginning of the 2022 tax year, P2P platforms will be required to send Form 1099-K to users and the IRS to report payment transactions totaling $600 or more in a financial year. While this does not have any impact on international money transfer yet, existing laws that govern cross-border transactions will be applicable including Gift Tax.