Venmo asking for tax verification and mentioned 1099K after sports bet withdrawal?

Wait, so does this mean if I sell stuff on Facebook Marketplace and get paid through Venmo, I'll get a 1099K too? Even if it's just my old personal items?

If you're just selling personal items for less than you originally paid for them (like used furniture or clothes), those generally aren't considered taxable income. However, Venmo and similar apps don't know the context of your transactions, so they'll still report them if they exceed $600 in a year. You'll need to keep good records to show these were personal items sold at a loss if you're ever questioned. For marketplace selling that results in profit (buying items to resell at higher prices) or gambling winnings like the original poster mentioned, those are indeed taxable income that should be reported on your tax return.

How does it work with calculating losses against winnings? Do you need documentation for every single bet you lost? I'm worried because I don't keep perfect records.

Is this actually legitimate? Seems kinda sketchy to give your tax docs to some random website. Do they access your actual tax account or anything?

The tool actually walks you through what documentation you need for deducting losses. You don't necessarily need every single losing ticket, but you do need to keep a diary or record of your gambling sessions showing amounts, dates, type of gambling, and location. The system helps organize this info in a way that satisfies IRS requirements. The site doesn't access your tax accounts directly - you upload documents and it analyzes them. Everything is secured with bank-level encryption, and they don't store your actual tax filing credentials. It just gives you guidance on how to properly report everything based on your specific situation. I was skeptical too but it saved me hours of confusion and probably prevented me from making mistakes.

How long did it take them to get someone on the line? Last time I tried calling the IRS myself I waited almost 3 hours and then the call dropped.

This sounds like BS honestly. The IRS doesn't give tax advice over the phone, they just answer procedural questions. Plus you're probably just talking to some entry-level employee reading from a script who doesn't actually know the tax code.

For me it took about 45 minutes for them to get an IRS agent on the line, but I didn't have to actively wait during that time. I got a text when they were about to connect me, so I was able to go about my day instead of sitting there listening to hold music. The IRS representatives actually can provide guidance on reporting requirements and documentation needs, which is what I was asking about. You're right that they won't give complex tax advice or tell you how to minimize your taxes - for that you'd need a tax professional. But for straightforward questions about how to properly report certain types of income like gambling winnings, they're quite helpful and knowledgeable.

Wait seriously? So I might not even get a 1099K this year? That's a relief. Do you know if Venmo will still collect our tax info anyway? They already made me enter my SSN.

Yes, even though the reporting threshold is still at $20,000 for the 2023 tax year, Venmo and other payment platforms are still collecting tax information now to prepare for when the lower threshold takes effect. They're getting everyone's information in their systems ahead of time. Remember though, whether you receive a 1099-K or not, gambling winnings are still technically taxable income that should be reported on your tax return. The form just makes it more likely the IRS will notice if you don't report it.

So if I understand correctly, if my total itemized deductions including gambling losses wouldn't exceed the standard deduction, I basically just have to eat the tax on my gambling winnings without any offset for my losses? That seems really unfair.

Unfortunately, yes, that's exactly how it works under current tax law. If you take the standard deduction, you can't deduct gambling losses at all, even though you still have to report and pay taxes on your gambling winnings. It's one of the quirks of the tax code that many people find frustrating. The only way to deduct gambling losses is to itemize, and for that to make sense, your total itemized deductions (including the gambling losses) would need to exceed the standard deduction amount. So unless you have significant mortgage interest, state/local taxes, charitable donations, or other itemizable expenses, you're stuck paying tax on the gross winnings. This is why it's important to keep detailed records of both wins and losses throughout the year - you might find that in some years itemizing makes sense, especially if you have other large deductible expenses.