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A Guide to Venmo 1099 Taxes for Freelancers and Self-Employed People

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.

Form 1040

This is the master tax form that every American, freelancer or not, needs to fill out after the tax year ends.

US Tax Forms

The most important tax credits self-employed and freelancers.

Form 1099-K

If you received $600 or more in online credit card payments during the tax year, you will need to receive this form in the mail to confirm the payment amounts.

Form 1099

All self-empoyed individuals and freelancers who earn more than $600 during the tax year use this form to report their income to the IRS.

Form 1099-NEC

If you earn an income for your work done as a self-employed individual or freelancer, this form is where you will see that income reported to the IRS.

Form 1099-MISC

You will use this form to confirm any payments you received outside of your freelance or independent contractor work, like prize money or money for healthcare.

Form 1040

This is the master tax form that every American, freelancer or not, needs to fill out after the tax year ends.

US Tax Forms

The most important tax credits self-employed and freelancers.

Form 1099-K

If you received $600 or more in online credit card payments during the tax year, you will need to receive this form in the mail to confirm the payment amounts.

Form 1099

All self-empoyed individuals and freelancers who earn more than $600 during the tax year use this form to report their income to the IRS.

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.

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.

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.

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.

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.

Need help navigating your taxes?

FlyFin's A.I. and 24/7 CPA support will guide you.

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