Venmo is a convenient platform for sending, receiving, and requesting money. But if you use Venmo for certain types of transactions, you could be on the hook for taxes.

The good news is that personal transactions on the payment platform typically don’t generate tax liability. But when you use Venmo for business purposes or the sale of goods for a profit, you'll need to prepare for a tax bill.

If you’re confused about how taxes work on Venmo, keep reading. You’ll learn which Venmo transactions the Internal Revenue Service considers taxable and what you need to know while preparing your tax return. We’ll also explain some new IRS rules for Venmo and other payment apps that you should prepare for in 2025 and 2026.

Read more: Free tax filing: How to file your 2025 return for free

When you’re sending money to friends and family using Venmo, you typically don’t need to worry about paying taxes or reporting the transactions to the IRS. But if you use Venmo or other peer-to-peer payment platforms, like PayPal or the Cash App, for business payments and purposes, you’ll need to report the income and pay taxes on the money you receive.

Here are some examples of transactions you don’t have to report to the IRS or pay income taxes on:

Your friend sends you money through Venmo to cover their share of a meal or Uber ride.

Your mom Venmos you money as a birthday gift.

Your roommate sends their half of the rent and electric bill to you via Venmo.

But if you use Venmo to collect payments for your small business or side hustle, or you’re selling items for a profit, you need to report the money you earn to the IRS and pay taxes on it. Here are some examples of Venmo transactions that fall under the reporting requirements and trigger tax liability:

You’re a business owner selling T-shirts and crafts on Etsy and accept payments through third-party apps.

You walk dogs or clean houses as a side hustle, and your clients pay you through Venmo or a similar platform.

You’re a freelancer who gets paid through Venmo.

You sell your old couch for more than you paid for it, and the buyer Venmos you the payment.

Note that these tax-reporting requirements apply no matter how you receive the money you earned. You’re required to report income and profits to the IRS and pay taxes on that money. It doesn’t matter whether you’re paid in cash or via check, direct deposit, credit card, or a third-party app. These requirements don’t change much from year to year.

Here’s where it gets confusing, though: The rules for when payment apps are required to report your income to the IRS and furnish you with tax documents are changing.

Read more: 18 small business tax deductions worth knowing

When your earnings on apps like Venmo, PayPal, and Zelle exceed certain thresholds for the year, the platform is required to send you a tax document called a 1099-K. For 2025 (returns are due April 15, 2026) and future tax years, platforms must send you the form if:

You received more than $20,000 in payments through more than 200 transactions, OR

Your clients or customers paid you by credit card, debit card, or gift card, regardless of how much you earned or the number of payments.

Here’s where it gets confusing, though: The 1099-K reporting requirements changed several times in recent years due to the American Rescue Plan, a 2021 COVID-19 relief bill. The threshold was scheduled to drop to $600 in 2022, but the IRS delayed implementing the new rule due to widespread confusion.

The IRS settled on a phased-in approach, requiring Venmo, PayPal, and others to send 1099-K forms to anyone who earned more than $5,000 in 2024. The threshold WAS scheduled to drop again to $2,500 for 2025 before the new $600 rule took effect in 2026.

But the One Big Beautiful Bill Act reinstated the original reporting threshold. As a result, payment apps and marketplaces are once again only required to send you Form 1099-K if you had at least $20,000 in payments across 200 transactions, or you received credit, debit, or gift card payments in any amount.

Platforms are required to send out 1099-Ks by Jan. 31 of each year. Even if you earned less than $20,000 or had fewer than 200 transactions, you may still receive a 1099-K form.

If you live in one of these states, your reporting threshold changes. Here's when you have to pay in these five states:

Maryland: $600

Massachusetts: $600

Vermont: $600

Virginia: $600

Illinois: $1,000 and four or more separate transactions

Read more: Getting a refund? Here are 5 smart ways to use it

If you’re self-employed and earn business income through Venmo, or you’re selling items for a profit, there’s no getting around the fact that you’ll owe federal tax on that money. You’ll need to report that income when you file your tax return, even if you don’t receive Form 1099-K. Consult with a tax professional if you have any questions about whether a transaction counts as taxable income.

You can’t avoid the taxes by turning to a different payment app. Other peer-to-peer payment platforms, including PayPal, Stripe, and Square, are subject to the same rules. And you’re responsible for reporting money you earn and paying taxes on it, regardless of how you’re paid — even if you don’t receive a 1099-K.

There are a few situations when you may face a tax bill for a Venmo transaction, even though you have no tax liability.

Make sure any payments your friends and family send you for gifts or reimbursements aren’t accidentally tagged as “goods and services.” If incorrectly tagged personal transactions exceed the $20,000 reporting threshold for the year, you could be issued a Form 1099-K, even though these transactions aren’t taxable.

Plus, you’ll pay fees on transactions that should be free. If someone sent you a payment that was inadvertently tagged as “goods and services,” ask them to contact Venmo to correct the mistake.

You can generally avoid paying taxes on Venmo transactions if you sell items for less than you paid, but you may still receive a 1099-K.

For example, suppose you paid $30,000 for your car and then sold it using Venmo for $23,000. You also sold lots of clothing and household items for less than you originally paid, so you had more than 200 transactions. Even if you received a 1099-K from Venmo, you could report the losses when you file your return and avoid any tax liability. Keeping records of how much you paid for any item you may eventually sell is essential.

Check with a tax adviser to make sure you don’t wind up with an unnecessary tax bill.

Read more: How to file taxes as an independent contractor

You’re required to pay taxes on money you earned through Venmo in 2025 and 2026, as well as other tax years. However, most taxpayers will only receive a 1099-K tax form if they received more than $20,000 in Venmo payments for goods and services across at least 200 transactions. But you’re still responsible for reporting Venmo income below these thresholds and paying taxes on that money, even if you don’t receive Form 1099-K.

The $600 tax rule was scheduled to take effect for the 2026 tax year, but it was eliminated by the One Big Beautiful Bill Act. The rule would have required third-party payment apps like Venmo, PayPal, and Cash App to submit Form 1099-K for any user who earned more than $600 on the platform during a tax year. The One Big Beautiful Bill Act effectively eliminated the $600 tax rule. Most people using Venmo and similar platforms for business payments will only receive a 1099-K if they earned more than $20,000 across at least 200 transactions.

You’ll receive a gains and loss statement from Venmo if you sold cryptocurrency using the platform. Regardless of what platform you use to sell crypto, your profits are subject to capital gains taxes. You may be able to offset some of your gains through capital losses. Consult with a tax professional about the rules.

Read more: Yes, crypto is taxed. Here's when you have to pay.

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