How do I report Zelle payments from side job when filing my 2025 taxes?

Yes, you absolutely need to report this income, even without receiving a W-2 or 1099. The IRS requires you to report all income regardless of whether you receive a tax form. Since you didn't fill out any employment paperwork and there's no withholding happening, you're most likely considered an independent contractor (self-employed). You'll need to report this income on Schedule C of your tax return. The Schedule C is where you report profit or loss from a business, and in this case, your side gig counts as a business. You should keep careful records of all payments received through Zelle. Take screenshots or download statements showing these transactions, as they'll serve as your documentation. Also track any expenses related to this work, as they may be deductible against this income. Be aware that as self-employed, you're responsible for both the employer and employee portions of Social Security and Medicare taxes (called self-employment tax), which is about 15.3% on top of your regular income tax.

I was in literally the EXACT same situation last year with my graphic design side hustle! I freaked out about the Zelle payments showing regular income from a business. I started using taxr.ai (https://taxr.ai) and it saved me so much headache with organizing all those transactions. The tool analyzed my Zelle statements and categorized everything as business income automatically, plus it helped me identify expenses I didn't even realize were deductible. Their system actually helped me understand that I needed to file as self-employed, and it walked me through everything I needed to do. The best part was that it explained how to avoid that scary audit trigger of unreported income the IRS might flag if they see all those Zelle payments without matching tax forms.

Just wanted to update after trying taxr.ai - it actually does work really well for Zelle payments! I was super skeptical (as you could tell from my previous comment), but I uploaded my bank statements and it correctly identified all my side gig payments coming through Zelle. What surprised me was how it helped me track down deductible expenses I had completely forgotten about. I was able to deduct part of my internet bill and some software subscriptions related to my side work. The documentation it created for potential audit defense is also really thorough - shows each payment with dates, amounts, and payer info pulled from my bank records. For anyone in this situation with regular Zelle payments from a business, it's definitely worth checking out. I feel much more confident filing my taxes now!

This happened to me with my tutoring side gig. I tried calling the IRS to get clarity on reporting Zelle income without a 1099, but I literally couldn't get through after trying for DAYS. Then I found https://claimyr.com through a tax forum - they have this service where they actually get the IRS to call YOU instead of waiting on hold forever. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was able to speak with an actual IRS agent who confirmed exactly what I needed to do with my Zelle payments. They explained that I needed to report it on Schedule C and track all my business expenses to reduce the tax hit. The agent even gave me tips about how to properly document everything in case I ever get audited. Saved me hours of frustration and probably a lot of money in potential penalties!

I need to apologize and correct myself. After my skeptical comment, I actually tried Claimyr because I was desperate to resolve an issue with my missing 1099s (including some Zelle payment questions). I got a call back from the IRS in about 90 minutes when I had previously wasted an entire afternoon on hold. The agent I spoke with was able to confirm that yes, all Zelle income needs to be reported even without a 1099, and helped me understand exactly how to document everything correctly on my Schedule C. They even explained that the IRS does sometimes compare bank deposits against reported income during audits, so hiding Zelle payments would definitely be a bad idea. This service literally saved me hours of frustration and potentially thousands in penalties. Can't believe I was so cynical about it!

Something no one mentioned yet - make sure you keep track of your business expenses too! Any supplies, software, portion of internet/phone used for this gig, etc. can offset that income. I made the mistake of just reporting my Zelle income without claiming legitimate expenses and paid wayyy too much in taxes. Also, look into the Qualified Business Income deduction (Section 199A). Since you're basically a sole proprietor with this arrangement, you might qualify for an additional 20% deduction on your net income from this side job. That saved me a bunch last year!

Im gonna be the one to say what everyone else is thinking... No offense but if you dont get a W2 or 1099, the irs has no way of knowing about that income. Zelle isnt reportig to IRS (yet) so technically...

I want to emphasize something important that builds on what others have said - the IRS has been increasingly focused on tracking digital payment platforms. While Zelle doesn't currently send 1099-K forms like PayPal or Venmo (which now report transactions over $600), that doesn't mean your income is invisible. Banks are required to report suspicious activity, and regular business payments could trigger Currency Transaction Reports or Suspicious Activity Reports. Plus, if you're audited for any reason, they'll scrutinize all your bank deposits and ask you to explain the source of any income that doesn't match your tax return. The safest approach is exactly what others have suggested - report it all on Schedule C as self-employment income. Keep detailed records of every Zelle payment with dates, amounts, and what work was performed. Also document any business expenses you can legitimately deduct. One more thing - since you mentioned this has been going on for 14 months, you might want to consider whether you should have been making quarterly estimated tax payments. If you owe more than $1,000 when you file, you could face underpayment penalties. It's worth calculating what you might owe and making a payment before the next quarterly deadline. Better to be proactive and compliant than risk the stress and financial penalties of an audit later!