Does Venmo Give You a 1099 for Taxes?
Understand Venmo's tax reporting rules and your responsibilities for transactions, even without a 1099.
Venmo has become a common way for individuals to send and receive money. Many users question how their Venmo activity might affect their tax obligations. Understanding when Venmo issues tax forms and what payments are taxable is important for tax season.
Venmo’s 1099-K Reporting Rules
Venmo, as a third-party payment network, is required to report certain payment activity to the Internal Revenue Service (IRS) by issuing Form 1099-K, “Payment Card and Third Party Network Transactions.” This form summarizes the gross amount of payments received for goods and services. Personal payments, such as splitting a dinner bill or receiving gifts, are generally not subject to this reporting requirement.
For the 2024 tax year, the IRS set a transitional reporting threshold of $5,000 for gross payments for goods and services. The $600 threshold is currently planned to take effect for the 2025 tax year.
Identifying Taxable Venmo Transactions
Distinguishing between personal and business transactions on Venmo is important for accurately reporting income. Payments for personal reasons, such as reimbursements for shared expenses like rent or groceries, or monetary gifts, are not considered taxable income by the IRS. These types of transactions do not need to be reported on a tax return.
Conversely, any payments received through Venmo for business activities are generally considered taxable income, regardless of whether a Form 1099-K is issued. This includes income from selling goods, providing services, freelancing, or any other activity engaged in with the primary purpose of earning a profit. For example, a graphic designer receiving payment for a project or an individual selling handmade crafts would typically have taxable income. The responsibility to track and report this income rests with the individual taxpayer, even if their activity does not meet Venmo’s 1099-K reporting thresholds.
Navigating Your Tax Obligations
If you receive a Form 1099-K from Venmo, it is important to understand that the form reports the gross amount of payments for goods and services. This gross amount does not account for fees, credits, refunds, or business expenses you may have incurred. You will need to reconcile the amount reported on the 1099-K with your own detailed records, which should include all income and deductible expenses related to your business activities.
Even if you do not receive a Form 1099-K, you are still obligated to report all taxable business income received through Venmo or any other source. This income is typically reported on Schedule C (Form 1040), Profit or Loss from Business, for sole proprietors and single-member LLCs. Schedule C allows you to report your gross receipts and then deduct ordinary and necessary business expenses to arrive at your net profit or loss.
In instances where the information on a received Form 1099-K appears incorrect, such as including personal payments or an inaccurate gross amount, you should contact Venmo directly to request a corrected form. It is advisable to keep a copy of all correspondence with Venmo for your records. If a corrected form cannot be obtained, the IRS provides guidance on how to report the incorrect 1099-K information on Schedule 1 (Form 1040), Additional Income and Adjustments to Income, to ensure accurate tax filing.