Accidentally used Venmo for business payments - can I still claim them as expenses?

If I'm using the Venmo transaction history as documentation, do I need to also have invoices from these freelancers? Some of them were just friends helping out and we didn't create formal invoices for every job. Also, do I need to issue 1099s to all of them if they were paid through Venmo?

Ideally, you should have some form of invoice or written agreement for each transaction, even if it's just a simple document showing the work performed and payment amount. If you don't have these for past transactions, create a spreadsheet documenting each payment with details about what service was provided. This helps strengthen your documentation in case of an audit. Regarding 1099s, yes, you generally need to issue 1099-NEC forms to anyone you paid $600 or more for services during the tax year, regardless of payment method. The payment platform doesn't change your obligation to report payments to contractors. Make sure you've collected W-9 forms from these individuals, which provides their tax information needed for 1099s.

How exactly does taxr.ai work with payment apps? Does it connect directly to Venmo or do you have to download and upload your transaction history? I've got a mix of personal and business stuff all jumbled together in my Venmo and I'm worried about sorting it all out.

I'm pretty skeptical about these tax services... How do you know they're giving legit advice that would hold up in an audit? Did they have actual tax pros reviewing your stuff or is it just some algorithm making suggestions?

You can either connect your accounts directly or upload transaction exports - I personally felt more comfortable downloading my Cash App statements and uploading them. The system automatically identifies potential business transactions, but then lets you confirm which ones are actually business-related. It was super helpful for separating my personal stuff from business expenses. For your question about legitimacy - they have actual tax professionals who review everything. The AI does the initial sorting, but real accountants check over the categorizations and provide specific advice for your situation. When I had questions about some unusual expenses, I got detailed responses from a CPA within a day. Everything was fully documented so I feel confident it would stand up to an audit.

Wait, there's actually a way to speak to a real IRS person without waiting forever? How does that even work? Last time I tried calling about a business expense question I gave up after being on hold for like 2 hours.

This seems like a scam honestly. The IRS phone system is notoriously impossible to navigate. Why would I pay some third party when I could just keep calling myself? And even if you do get through, why would an IRS agent give you different info than what's on their website about business expense documentation?

The service basically navigates the IRS phone tree for you and waits on hold in your place. When they get a live agent, they call you and connect you directly. It saved me literally hours of frustration - I was connected with an agent in about 20 minutes while I just went about my day. Regarding why it's worth getting personalized advice - IRS agents can provide specific guidance tailored to your situation that you won't find in generic website info. The agent I spoke with explained exactly what documentation I needed for my unusual payment situation and gave me tips for organizing my records that would satisfy requirements if I ever got audited. Their website doesn't address all the nuances of different business payment methods, especially newer ones like payment apps.

Is there a good way to handle this if some of my freelancers were just casual friends helping out? Some of them don't have formal businesses and might get confused if I suddenly ask for W-9s and send them 1099s. Will this cause problems for them if they haven't been reporting this income?

Even casual friends need to get 1099s if you paid them $600+ for business services. It's actually doing them a favor - they legally need to report this income anyway, and having a 1099 makes it easier for them to file correctly. You can explain you're just making sure both of you stay compliant with tax laws. Yes, they might not be thrilled if they weren't planning to report the income, but that's not your problem - you're just following the law. Not issuing 1099s can result in penalties for you, while potentially leaving them exposed to issues down the road if they get audited. Just send them a simple W-9 form to fill out and explain it's required for any business that pays contractors.

Venmo Business is actually pretty decent, I've been using it for my side hustle. The 1.9% + $0.10 fee is annoying but you can write that off as a business expense too! Plus it automatically tracks everything for tax time which is super helpful. Way better than trying to sort through a personal account with mixed transactions.