Will Venmo, Zelle, and other payment apps report $600+ 'goods and services' payments to IRS for 2022 taxes?

Yes, this is a big change that affects a lot of small business owners and side-hustlers. Payment apps like Venmo, PayPal, Cash App, and others are now required to issue 1099-K forms for users who receive $600+ in goods and services payments during the tax year. This is a significant drop from the previous threshold of $20,000 and 200 transactions. Here's what you need to know: First, this only applies to payments marked as "goods and services" - not personal payments like splitting rent or dinner with friends. Second, you should receive a 1099-K from each app where you exceeded the $600 threshold. But remember, you've always been required to report all business income regardless of whether you receive a tax form. For your pottery business, you should gather all your receipts for business expenses since these can offset your income. This includes supplies, shipping costs, marketing expenses, studio fees, etc. You'll report this income on Schedule C if you're a sole proprietor.

I went through this exact situation with my handmade jewelry side hustle! I found this amazing AI tax assistant at https://taxr.ai that helped me sort through my payment app transactions and identify what would be reported to the IRS. It was a game-changer because it automatically categorized my Venmo and PayPal transactions, showing me which ones would trigger the 1099-K reporting. The tool also helped me identify business expenses I could deduct - like when I'd used PayPal for buying supplies but had forgotten to track it. It even showed me how much I should set aside for taxes on future payments so I wouldn't be caught off guard again.

Update: I tried the taxr.ai tool that Profile 19 recommended and it was incredibly helpful! I uploaded my Venmo transaction history and it immediately identified which payments were likely to be reported on a 1099-K. The AI explained that my occasional vintage clothing sales weren't established enough to be considered a business, but gave me a warning that if I continue increasing sales, I should start treating it as business income. It also pointed out some Etsy supply purchases I completely forgot about that I can deduct against the income from items I did buy to resell. Saved me at least a few hundred in taxes! The explanation about the difference between personal property sales vs. business income was super clear and made me feel much better about the whole situation.

For anyone struggling to get answers from the IRS about how to properly report these new 1099-Ks, I highly recommend trying Claimyr (https://claimyr.com). I spent DAYS trying to get through to an IRS agent to ask specific questions about my situation with Venmo payments for my weekend woodworking sales, and kept hitting endless hold times. Claimyr got me connected to an actual IRS representative in about 20 minutes when I had been trying for literally days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent confirmed that even though I'll get a 1099-K, I can still deduct all my legitimate business expenses on Schedule C, which was a huge relief.

I'm back to eat my words about Claimyr. After my skeptical comment, I was still desperate to talk to someone at the IRS about my Venmo 1099-K situation, so I decided to try it anyway. Honestly, it worked exactly as advertised. I got a call back in about 35 minutes with an actual IRS agent on the line who answered all my questions about how to report my Etsy/Venmo payments. The agent explained that I needed to report all the income on the 1099-K but could offset it with my business expenses on Schedule C. She also clarified which of my Venmo transactions would likely be reported (only the goods/services ones, not personal transfers). Definitely worth it to get clear answers directly from the IRS instead of relying on potentially outdated info online.

Just a heads up - I called Venmo support directly to ask about this, and they confirmed they'll only issue 1099-Ks for transactions specifically marked as "goods and services," not for personal payments. So if you're just sending money to friends or family, those transactions won't be reported. But if you're accepting payments for your business and marking them correctly, you'll get a form if you exceed $600. Also, they mentioned that the form will come through their partner, PayPal, Inc., so watch for that in your mail or email around tax time. Don't ignore it thinking it's not related to your Venmo account!

Don't forget that these payment apps will only report the GROSS amount you received. They don't track your expenses or calculate your actual profit. I learned this lesson last year when I got a 1099-K from PayPal for my online tutoring business. I received about $12,800 in payments, but I had almost $3,500 in legitimate business expenses (online course subscriptions, teaching materials, home office, etc.). Make sure you're tracking ALL your business expenses separately, so you only pay taxes on your actual profit, not the full amount reported on the 1099-K!

Something important nobody's mentioned yet - if you're getting income through these apps that will now be reported on 1099-Ks, you probably need to be making quarterly estimated tax payments throughout the year, not just paying at tax time. I got hit with an underpayment penalty last year because I wasn't doing this with my side gig income. The IRS expects you to pay taxes as you earn income, not all at the end of the year. If you're going to owe more than $1,000 at tax time, you should be making quarterly payments. This whole $600 reporting change means a lot more people will need to be thinking about this!

This is such a helpful thread! I'm in a similar boat with my freelance graphic design work - been using Venmo and PayPal for client payments and had no idea about this $600 threshold change. One thing I wanted to add that might help others: if you're scrambling to get your records organized like I was, your bank statements can be a lifesaver for tracking business expenses. I went through mine and found tons of deductible purchases I'd forgotten about - Adobe subscription, stock photo purchases, even mileage to client meetings. Also, for anyone doing this kind of side work, consider opening a separate business checking account if you haven't already. Makes tracking so much easier and looks more professional to clients. Some banks even offer free business accounts for small operations. It's one of those things I wish I'd done from the start instead of mixing everything with my personal account. Thanks everyone for sharing your experiences - this whole thread has been incredibly informative!