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.
Writing, design, and rideshare work, in addition to renting out equipment is should be reported. The $600 income threshold applies to:
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.
Personal transfers like splitting dinner or paying bills are not taxable income. Other non-taxable income includes:
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).
The easiest way to prepare is to:
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.