Do music buskers need to report Venmo/PayPal payments as 1099 or self-employment income for taxes?

What if people send money on Venmo but mark it as "friends & family" instead of services? Does Venmo still report that? I've been doing caricatures at events and everyone just sends me money this way.

If people send money marked as "friends & family," Venmo and PayPal generally don't report those to the IRS because they're treated as personal transfers rather than business transactions. These platforms mainly report payments specifically marked as "goods and services." However, you're still legally required to report ALL income you earn regardless of how it's paid or whether you receive a 1099. The IRS expects you to report all income earned from your caricature business, even if it comes through as friends & family transfers. Using the friends & family option to avoid taxes could be considered tax evasion if you're actually providing a service.

How much did it cost? The free tax filing options always mess me up when I try to enter my DJ gigs income.

Did it actually save you money compared to just using TurboTax? I'm skeptical of these specialized tax services because they seem like they're just doing what the regular tax software already does.

I don't remember the exact price, but it was based on how complex your situation is. For me with just the busking income it was definitely affordable and worth it for the peace of mind. They have different options depending on what you need. They saved me about $1,200 compared to what TurboTax was showing! The difference was they actually understood what expenses were deductible for street performers. TurboTax kept rejecting some of my equipment costs, but taxr.ai's reviewer explained exactly how to properly categorize them. Plus they showed me how to handle the cash income properly which was a complete mystery to me before.

So wait, this is just a service that waits on hold with the IRS for you? How does that even work? Do they patch you through somehow?

Sorry but this sounds like BS to me. I've been trying to reach the IRS for months about my street vendor income. No way you got through in 15 mins when everyone else waits for hours or days.

That's exactly what they do - they have a system that navigates all the IRS phone menus and waits on hold for you. When an agent is about to pick up, they call your phone and connect you directly to the IRS agent. You don't have to do anything except answer when they call you. I totally get the skepticism - I felt the same way! I'd been trying for over two weeks to get through on my own with no luck. But it absolutely worked. The average wait time for the IRS is something like 2-3 hours these days, but their system just handles that part for you while you go about your day. When they called me back, I was literally at a coffee shop practicing new songs.

Thanks for the expense list! Do you track all your cash too? Like literally count what's in the case after each session? I've been pretty lazy about that part.

Yes, I absolutely count what's in my case after each session! It only takes a minute, and I just jot it down in a small notebook I keep in my instrument case. At the end of each month, I add it all up and transfer the total to a spreadsheet. For tax purposes, it doesn't matter if you get a 1099 or not - ALL income needs to be reported. The IRS doesn't care about the source, they just want their cut! Being diligent about tracking cash now will save you major headaches if you ever get questioned about your income. Plus, seeing your daily/monthly totals is pretty motivating!

While I understand the frustration, I have to caution against not reporting income. Even small amounts from busking are legally required to be reported. The penalties for unreported income can be severe and far outweigh any tax savings. It's worth noting that lower-income performers often qualify for tax credits and deductions that can significantly reduce what you owe or even result in a refund. Many street performers making under certain thresholds may end up owing very little in actual tax. The self-employment tax (Social Security/Medicare) is usually the bigger concern for gig workers.

I guess you're right about the risk. I just get frustrated with the system. My friend did get a letter from the IRS about unreported income and ended up paying way more with penalties than if he'd just reported it honestly in the first place. Still think the system is unfair to small earners though! But I reported my DJing income this year just to be safe.

How do you even calculate quarterly payments when busking income is so unpredictable? Some weekends I make $300, others barely $50.

Great question! For unpredictable income like busking, you can base your quarterly payments on your estimated annual total. Since you mentioned making around $6,200 so far in 6 months, you might project $12,000+ for the year. You can use Form 1040ES to calculate estimated payments, or make it simpler by setting aside about 25-30% of your busking income each time you perform. Put that money in a separate savings account for taxes. If you overpay during the year, you'll get a refund when you file. Another option is to make "safe harbor" payments - if you pay 100% of what you owed in taxes last year (110% if your income was over $150k), you won't face penalties even if you underpay for the current year. This works well for variable income situations.