Venmo 1099 Taxes: What Freelancers and Small Business Owners Should Know

by
Arielle Contreras
Updated 
September 21, 2022
June 28, 2022
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Reviewed by
Sarah York, EA

Venmo is a payment app owned by PayPal, a staple payment processor for merchants and freelancers.

While the two platforms are similar, Venmo’s social media-esque features have made it an increasingly popular choice for Millennials and Gen Z. In fact, like “Googled”, “Venmo” has become a verb. “I’ll Venmo you money for pizza” is probably being said on a college campus at this very moment.

But Venmo isn’t just used for sending money to family members and friends. It’s also finding its footing among freelancers and small business owners.

This article covers Venmo 1099 tax forms, relevant IRS rules, and how to file your self-employment taxes when you get paid through the app. If you’re self-employed and using Venmo, or even thinking of accepting Venmo payments, read on to find out how the app will affect your taxes.

Contents

What is a Venmo 1099-K tax form?

A 1099-K is an income summary sent to anyone who earned at least $600 in business transactions through a payment app like Venmo. 

Let’s say you’re a freelance carpenter and use Venmo to process payments from your clients. If you make at least $600 this year, Venmo will send you a 1099-K summarizing your earnings. It will also send a matching 1099-K to the IRS.

How the 1099-K rules have changed

If this sounds new to you, it’s because the Form 1099-K law is new! Before 2022, the form was only issued to people who:

  • 🛍️ Logged at least 200 business transactions
  • 💰 Earned at least $20,000 in a calendar year

Many freelancers, independent contractors, and other 1099 workers earn at least $600 from their respective gigs. So with these new rules in place, a lot more people will receive 1099-Ks.

Does Venmo send a 1099-NEC?

No, Venmo doesn’t send its users a 1099-NEC tax form.

Here’s how the 1099-K and 1099-NEC differ — and why Venmo only sends the former:

  • 💳 1099-K is sent to people who earn at least $600 through indirect payment methods, like gift cards, credit cards, debit cards, or payment processors.
  • 💵 1099-NEC is sent to people who earned at least $600 through direct payment methods, like electronic fund transfer, direct deposit, cash, or checks

Now that we know what a Venmo 1099-K is and who’s eligible for one, let’s cover how to go about getting the actual form.

Will you get taxed on personal Venmo payments?

No, your personal Venmo transactions won’t get taxed even with the new law about 1099-K forms. Venmo payments are only taxable if they’re:

  • ✅ Tagged as “goods and services”
  • ✅ Made to a separate Venmo business account (more on this later!)

The new tax rule has left Venmo users with a lot of questions — and possibly some fears. But rest assured: it doesn’t mean your personal payments will get reported to the IRS.

Bottom line: You only have to file taxes on commercial transactions. If a friend Venmos you for drinks, you’re in the clear. It won’t even show up on your 1099-K.

Speaking of which, let’s take a closer look at how to get your copy of the form — for business-related payments only, of course.

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How to get your Venmo 1099-K

Venmo only provides digital 1099-Ks, so you won’t get a form through the mail. Instead, you can find it in your Venmo dashboard after January 31 (assuming you qualify). Venmo will notify you in the app and send you an email to let you know when it’s available.

To find your Venmo 1099-K:

  1. Sign in to your account
  2. Click “Settings”
  3. Select “Tax Documents”

What to do if you don’t receive a 1099-K from Venmo

Not everyone who uses Venmo for business will get a 1099 form from the platform. But unfortunately, not having the form doesn’t mean you get to skip filing your taxes. 

Here’s how to handle things if you don’t get a 1099, depending on how much money you made through the app.

If you earned at least $600 from Venmo

If you qualify for a 1099-K but haven’t received it, you can:

  • 📝 Fill out the Venmo customer support form
  • 📞 Contact them at (855) 812-4430
  • 🧘 Do nothing — as long as you know how much you made, you don’t need a 1099-K to do your taxes!

If you want to go for the “do nothing” option, you can follow the same steps as someone who didn’t qualify for a 1099-K at all.

If you earned less than $600 from Venmo

If you don’t qualify for a 1099-K, you might still have to file a tax return for Venmo income. (The IRS expects you to file as long as you earned at least $400 from self-employed work.)

That means you’ll still need to figure out exactly how much you earned through Venmo, so you can report the amount when you file. 

Here’s how to find the total amount of your Venmo business transactions:

  1. Log into your account on desktop — transaction history isn’t available through the app or mobile browser
  2. Click “Statements” in the top-right
  3. Select the dates you want to view
  4. To download the statement, click “Download CSV”

How to file your Venmo 1099 taxes

Figuring out exactly how much money you earned during the last year can be one of the more complicated tax filing steps for self-employed people. That’s especially true if they’re juggling multiple gigs or balancing a side hustle with a full-time job.

To make the whole process as simple as possible, you might want to consider using a tax filing app like Keeper Tax. Our software guides you through the whole process, helping you claim all your eligible write-offs and empowering you to understand your taxes.

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If you decide to file your taxes yourself, good news: you’ve already done step one! So you can breeze on to the second step of filing. 

Step #1. Fill out Form 1040

1040 is a tax form used to report your gross income. In other words, everything you earned in the previous year.

Step #2. Make a list of your business expenses

There are no two ways around it: Self-employed people pay higher tax rates than full-time employees (also called W-2 employees). In addition to paying state and federal taxes, 1099 workers are also responsible for self-employment taxes.

If you use our 1099 tax calculator, you might end up with a steeper number than you’d expected.

Luckily, self-employed people have a secret weapon: business write-offs.

How do business write-offs work?

Business write-offs let you lower your taxable income by subtracting everything you spend on your self-employed work.

Want some examples? To do their job, an Uber driver will need to spend money on gas. And a freelance copywriter needs a computer and internet. 

You can find these write-offs yourself, meticulously keeping track of every gas fill-up, business meal, printer paper purchase, and so on. Or you can outsource the hard work to Keeper Tax

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We built an app to automatically scan your transactions and write off all the business expenses for you. And when you’re done, you can even file your taxes through the app.

3. Fill out Schedule C to determine your taxable income

Speaking of business expenses, this is the form you’ll use to list all of yours. It’s where you get to start saving money. So make sure you fill yours out properly by checking out our detailed guide to Schedule C.

You’ll also use Schedule C to report your gross income from your freelancing or small business — including anything you got paid through Venmo. You can add this up using either your 1099-K or your spreadsheet of transactions from Venmo.

Finally, you’ll also figure out how much self-employment income you’ll actually be taxed on by subtracting your write-offs from your gross income.

4. Figure out when you need to pay your taxes

Taxes might not be a Sunday afternoon picnic, but at least we only have to deal with them once a year, right?

Not exactly. If you’re self-employed and expect to owe at least $1,000 in taxes, you’ll have to pay your taxes four times a year — or once a quarter. 

The deadlines for these quarterly tax payments typically fall on:

  • 🌷 Quarter 1: April 15th 
  • 🏖️ Quarter 2: July 15th
  • 🍁 Quarter 3: October 15th
  • 🌲 Quarter 4: January 15th

Keep in mind that your quarterly taxes are estimates based on the amount you expect to owe the IRS. If you overpay, you’ll receive a refund for the extra amount. But if you underpay by a significant amount, you could face a penalty

Our quarterly tax calculator can help you determine how much you should pay each quarter — and whether you need to pay quarterly taxes in the first place.

How to save money on your Venmo 1099 taxes

We’ve already noted the importance of finding all the deductions you qualify for. To get you started, here are a few common 1099 business write-offs:

While payment platforms like PayPal and Square tend to offer more robust services for small businesses, Venmo is a solid option that will likely continue evolving to accommodate the needs of self-employed people.

If you want more support for your business transactions — and a way to ensure your financial records stay organized — you can always set up a Venmo business account.

Reasons to set up a Venmo business account

If you use Venmo to get paid for selling goods or services the sales of goods or services, it’s a good idea to set up a business account.

There are a couple of reasons for this.

#1: It helps ensure your transactions are properly classified ✅

When someone sends you money on Venmo, they have the option to tag it as “personal” or “goods and services.”

If you only have a personal account, both types of transactions will go to your one account — and you’re relying on whoever sent you the money to properly classify it.

Setting up a business account helps avoid this because your business transactions stay consolidated in one place

#2: It’s better for your recordkeeping hygiene 🛀 

Keeping all of your business transactions in a separate account can help you separate out the records you need to hold on to.

Why do you need those records in the first place? It’s because the IRS considers Venmo transfers “unsubstantiated.” This means you should keep three years’ worth of documentation explaining each of your Venmo business transactions.

Traditionally, that might mean:

  • 🧾 Receipts
  • 📝 Expense reports
  • 📨 Invoices

Don’t want to hang on to all that paperwork? Luckily, there’s an easier way to keep your financial records: using Keeper Tax. The app will make sure your financial records are up to date — and free you from having to store three years’ worth of paper receipts!

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#3: You get Venmo business perks 💼

Venmo offers special features to small business owners who have a business account, including:

  • ✨ A more customizable profile, complete with photo gallery and social links
  • 💵 A tipping option
  • 📱QR kits for contactless payments
  • 🏦 Higher limits for transfers to your bank account

Check out their FAQ page for more info.

How to set up a Venmo business account

If you’re a self-employed person who’s been using a personal account to get paid, don’t worry! Setting up a business profile only takes a couple of minutes:

  1. Sign in to your account
  2. Select “Settings”
  3. Choose “Create Business Profile”

You’ll then be asked to fill in the following information about your business:

  • 📛 Your Social Security Number, Employer Identification Number, or Individual Tax ID Number (depending on which one you use to file your business taxes)
  • 👔 Your business username
  • ✏️ A short description of your business
  • 🏢 The category your business falls under
  • 📸 A background and profile photo
  • 📫 The mailing address for your business 
  • 🖥️ Any other public information you want displayed about your business, such as location, contact information, and website or social media links

Once you’ve got your 1099-K in hand and your Venmo account set up the way that best suits your business, you’re ready to tackle tax time.

Arielle Contreras

Arielle Contreras

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Arielle is a freelance writer who’s covered a range of topics including publishing, public transit accessibility, and freelance taxes. Her work has appeared in Electric Literature and She Writes and has been featured in Capital Currents. Arielle spends her free time on nature trails, thinking about what she’s going to cook for dinner and what she’ll write next.

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