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THE FREELANCER'S GUIDE TO:

Venmo 1099 Taxes

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Venmo and IRS requirements

As we move towards a digital world, the way we send money and make payments has completely evolved. There’s a shift from a cash-based economy towards a digital economy with payment apps, such as Venmo and Paypal, completely changing the way we handle money. Venmo is a great way to easily send money to friends and family with the click of a button. It’s also a way for freelancers and self-employed people to receive money for selling goods or services. When it comes to Venmo and taxes, there are certain requirements set by the Internal Revenue Service (IRS). So if you’re using Venmo or accepting Venmo payments, you’ll need to report this income and pay self-employment taxes. We’ll cover the ins and outs of Venmo taxation, including the Venmo taxing system and any necessary Venmo tax form.

Table of contents

What’s Venmo?...Read more

Do I have to pay taxes on Venmo?...Read more

Will Venmo send me a 1099?...Read more

New reporting requirements...Read more

Goods and services...Read more

Venmo and taxes...Read more

When you’ll receive Venmo tax forms...Read more

What’s Venmo?

Venmo is a free app that provides a way to send and receive money from friends, family or clients. You can use Venmo for things like paying rent, splitting a dinner bill with a friend, as a payment method on certain websites or apps and as a way to debit money using the Venmo debit card. Although the app is free, some services charge a fee. For example, If a payment goes through a credit card, you’ll be charged a 3% fee. Also, there’s a fee if you instantly transfer money from Venmo to your bank account.

Do I have to pay taxes on Venmo?

The Venmo taxing system can seem a little confusing. But one thing is clear, you won’t be taxed on personal Venmo transactions and they won’t be reported to the IRS. So if you send a friend money for last night’s dinner, this transaction won’t be taxed. You’ll only be taxed on transactions for goods and services.
Do I have to pay <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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        text-fill-color: transparent;">taxes on Venmo?</span>
If your Venmo account is used for personal and business use, it can get confusing to track which expenses are for business purposes and which aren't. So it might be a good idea to set up a business account. Venmo ensures all your financial information is up to date, so you won’t have to worry about keeping track of receipts or invoices. Plus, you might be eligible for some perks, like a higher bank transfer limit.

Will Venmo send me a 1099?

This Venmo tax document will arrive in your inbox and within the app. You should receive a notification from the app that your Venmo 1099 documents are ready.

New reporting requirements

With the start of the 2022 tax year, the IRS will require all payment transactions of $600 or more for goods or services sold to be reported. So if you receive $600 or more in payments for services or goods through Venmo, you’ll receive a Venmo 1099 K. Before 2022, the Venmo 1099 K was only issued for people that met certain criteria including:
  • Earning at least $20,000 during the year
  • At least 200 business transactions
Freelancers and small business owners might not have met the requirements. So with the recent change, the IRS can now monitor transactions and payments through third-party processing apps more closely.

Quick tip

You don’t have to report any transactions from friends or family. The requirement applies only for the sales of goods or services.

Goods and services

You can mark a payment as goods and services when you send a payment.
Goods and <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
        -webkit-background-clip: text;
        -webkit-text-fill-color: transparent;
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        text-fill-color: transparent;">services</span>
When you make a Venmo payment to a business, it’s automatically marked as goods and services. This protects the buyer and seller since both are eligible for Purchase Protection if there’s a problem.

Venmo and taxes

When it comes to filing your Venmo taxes, the first step is to fill out Form 1040. This is the official document used to file annual income taxes. Paying self-employment taxes is a requirement for anyone that’s not a W-2 employee. Typically, taxes are taken from your paycheck and applied towards Social Security and Medicare taxes. Usually, your employer pays half of the 15.3% tax rate. But when you work for yourself, you’re now considered the employer and the employee and are responsible for paying the whole 15.3% tax rate. You can use a Venmo tax calculator to help you figure out how much you might owe. You can also deduct things like your home office or the miles you drive, which helps lower your tax bill. You’ll report these on Schedule C. You’ll also use this Venmo tax form to report your total or gross income from your business. But one Venmo tax document you won’t be receiving is a 1099-NEC.
Venmo <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
        -webkit-background-clip: text;
        -webkit-text-fill-color: transparent;
        background-clip: text;
        text-fill-color: transparent;">and taxes</span>
Tax Forms Venmo 1099-K vs. Venmo 1099-NEC 1099-NEC: Used for reporting direct payments of at least $600 to self-employed and freelancers by cash, EFTs, checks or direct deposit 1099-K: For indirect payments of at least $600, like third-party payment processors and credit cards

When you’ll receive Venmo tax forms

Your 1099-Ks will be available by January 31 and the statement for gains and losses will be available by February 15. You’ll receive an email and a notification in the app letting you know information about your Venmo taxes is available. From there, you can download the tax information. If you cannot find your tax information or you don’t receive a notification from Venmo, it may be possible you didn’t meet the requirements for the Venmo 1099.

Form 1099-MISC VS Form 1099-NEC

Understand what makes these 1099 forms different from each other and what they mean for you as a 1099 freelancer, independent contractor or self-employed individual.

Form 1040-ES

This vital tax form for self-employed individuals and freelancers is how they pay quarterly taxes, which they need to estimate (ES means estimated taxes).

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

Form 1040 Schedule SE

SE stands for self-employment tax, and this is where people who make a living working for themselves or freelancing pay Social Security and Medicare taxes.

Form 8829

If you use your home for work, you can deduct things like utilities and supplies used for your home office or storage space used for inventory from your taxes. Use this form to figure out how much you can deduct.

Form 1099

If you're self-employed, this is the form that the people who pay you use to report those payments to the IRS. Here's what you need to know about it.

Losing a 1099 form

If you've lost a 1099 that was sent to you, fear not. Here's what you can do if it happens.

Form 1099-NEC

Entities that pay you for services as a freelancer or independent contractor report those payments to the IRS using this 1099 form.

Form 1099-MISC

Entities that give you other forms of income as a freelancer or independent contractor, such as prize money or money for healthcare, report those payments to the IRS using this 1099 form.

Avoid 1099-Misc

There are ways to lower the amount of tax you pay as a 1099 self-employed individual. Here are five proven strategies.

Form 1099-K

If you receive payments of $600 or more as a self-employed individual through credit card companies and payment services like PayPal, they report those payments to the IRS using this 1099 form.

Paypal

Here's how to receive a 1099-K from PayPal and how to use it to file and pay your 1099 taxes.

Shopify

Here's how to receive a 1099-K from Shopify and how to use it to file and pay your 1099 taxes.

Form 1099-MISC VS Form 1099-NEC

Understand what makes these 1099 forms different from each other and what they mean for you as a 1099 freelancer, independent contractor or self-employed individual.

Form 1040-ES

This vital tax form for self-employed individuals and freelancers is how they pay quarterly taxes, which they need to estimate (ES means estimated taxes).

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. to find every possible tax deduction. Then, the CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your Venmo taxes. Download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and more money on your taxes than last year, guaranteed.
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