Venmo Tax
With over 50 million users in the United States and transactions close to $200 billion, Venmo remains one of the most popular mobile payment services, especially amongst young people.
One thing that most young people have in common is that they don’t know much about taxes. At TaxUni, we help youngsters that want to learn more about how taxes work. In this article, we’ll guide you on what to expect in the 2024 tax season for your Venmo transactions.
Reporting income from Venmo
The transactions you received on Venmo may be taxable. That’s why Venmo is mandated to file and issue taxpayers with Form 1099-K, Payment Card and Third Party Network Transactions. If you’re a business, there is no difference between the payments received on Venmo and any other. All businesses must claim the payments received on Venmo and file their federal income tax returns accordingly.
This tax form will show the gross payments received in each month during the calendar year. You can then attach it to your federal income tax return and file it accordingly. Missing to report the income earned on Form 1099-K can lead to the IRS considering this as tax evasion.
How to get tax forms from Venmo?
When the 1099-K or any other tax form is issued to you, there will be a notification letting you know that the forms are ready to download. You can then print it out if you’re filing a paper tax return or keep it as is and e-file with the 1099-K and other tax forms.
As for when to expect tax forms from Venmo, wait until mid-January to late February – Venmo generally issues these tax forms later in January. If you haven’t received an email or notification about your tax forms, check in with Venmo customer service. This will ensure that you received them, or you don’t need to include the transactions from Venmo on your federal income tax return due to the amounts being under the required limit.
Why Venmo taxes are important
Venmo is a payment processor; therefore, it must report transactions exceeding a certain amount to the Internal Revenue Service. This reporting is also done with the persons and businesses that received the payments. There are a wide variety of tax forms used for income reporting purposes. These tax forms are also known as information returns – like W-2, 1099s, etc.
When Venmo and taxes are involved; there is one thing that’s often overlooked: federal income tax withholding. Because the payers don’t have the responsibility to withhold federal income taxes like an employer, you might have a shocking tax bill.
That’s why it’s vital to track down how much you received in payments on Venmo that you haven’t paid taxes on and make quarterly estimated tax payments so that you don’t end up with a huge tax bill. Do these, and you won’t sweat when the tax season comes.
Read more on 1099 Forms, as it’s the one that you’ll receive on Venmo – not any other.
