Paid through Venmo, CashApp, or PayPal in 2024? The IRS will know

Payment platforms like Venmo and CashApp have become the easiest way to send money to someone over the past few years, but if you’re receiving payments for work through these apps, there are some important tax changes you need to know about.

In a recent press release, the IRS confirmed that third-party payment platforms (PayPal, CashApp, Venmo, Zelle, and others) will soon report transactions that total above a certain amount to the government. For the calendar year 2024 or 2025, that limit is $5,000. For 2026 and beyond, that limit drops to $600.

This regulation passed several years ago, but the IRS delayed it due to concerns about taxpayer confusion.

So what does this mean for you?

Technically, you should have been reporting this income all along, no matter how much you actually received. Now, however, the IRS is forcing you to pay taxes on that income by making sure payment platforms report it.

The good news is that personal payments don’t fall under this law, no matter how much you’ve received.

How will the IRS know the difference between personal and business payments?

To start, these platforms offer the option to mark transactions as personal or for goods and services (which usually charges the recipient a fee) when sending money. Payments received under the latter designation will automatically show on the 1099-K form.

If you think you can just tell your customers to mark a payment as personal, that’s illegal. Plus, if you receive money from many different accounts, the payment platform will usually ask if you’re a business. If you say no and the activity continues, the company will investigate. Given that the payment platforms want to stay within tax compliance, they have plenty of reasons to make sure everything is level.

The IRS requires companies to send you a 1099-K form to you by Jan. 31 of the following year if you meet the requirements.