The IRS Reminds Americans $600 Transations On Payment Apps Must be Reported

If you use PayPal, Cash App, or Venmo, the IRS wants to know. 

As of 2023, these payment apps must report all business transactions over $600 annually. 

Form 1099-K must be filed with the IRS to properly report the income. 

What is Considered Taxable Income?

Writing, design, and rideshare work, in addition to renting out equipment is should be reported. The $600 income threshold applies to:

• Sales of goods and products
• Freelance work
• Side gigs and services

Example: If you run a small business and use PayPal to collect payments totaling $800, you will receive a Form 1099-K. This income must be reported as taxable business income.

What is Considered Non-taxable Income?

Personal transfers like splitting dinner or paying bills are not taxable income. Other non-taxable income includes:

• Shared household expenses
• Gifts from friends or family
• Personal reimbursements or transfers

Common Questions About 1099-K

What happens if I don’t report?

The IRS will send you a notice proposing additional tax, interest, and penalties. Failing to report triggers penalties with the IRS.

What if I receive a 1099-K in error?

If you accidentally receive a 1099-K from a payment app, contact the app directly to correct it.

Will I be double taxed if I already report my income?

No—Form 1099-K is informational; if you already include your business income on Schedule C, you won’t be taxed.

What if I use one account for personal and business payments?

Keep careful track of non-taxable and taxable transactions (screenshots, invoices, and notes). 

How To Prepare for 1099-K IRS Reporting

The easiest way to prepare is to:

• Report income on Schedule C
• Separate personal and business transactions
• Keep receipts and logs
• Work with a tax pro

Conclusion: How to Protect Yourself

At Tax Attorneys of America, we help minimize penalties, file amended tax returns, and dispute inaccurate 1099-K forms. Stay informed today with tax help.