Skip to Content
payment app tax information
© Michael Vi |

If you got paid more than $600 through PayPal or Venmo this year, you might get a tax form

We’re here with a friendly reminder that the government can and will tax you on your PayPal or Venmo transactions if they are over a certain amount. We told you earlier this year about the American Rescue Plan. Tap or click here for more details.

We don’t mean to alarm you, of course. Unless you’re being paid under the table, you will likely receive documents outlining your annual earnings. Still, though, it pays to know what’s ahead early on.

Read on for the full scoop on Venmo and PayPal taxes.

What should Venmo and PayPal users expect in 2023?

Don’t look now, but tax season is just around the corner. In October, the IRS released a statement urging anybody being paid through Venmo, PayPal, and other payment services to declare their earnings in anticipation of filing in 2023. Tax law now states that a single transaction exceeding $600 can trigger a 1099-K.

This income includes all part-time work, freelance work, side gigs or the sale of goods and services, regardless of whether they received Form 1099-NEC or Form 1099-K from their employer or client. 

The good news is the IRS emphasizes that money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.

The above announcement serves as a reminder as the rules have changed slightly for income of this type in 2022. The American Rescue Plan Act of 2021 (ARPA) reduced the reporting threshold from $20,000 to $600, which may leave some individuals without the knowledge to file their taxes in full.

One result of this change is that we’re now required to pay more attention to even small transactions. What can you do to set yourself up for success in 2023?

Tax tips for anybody getting paid through cash apps

Tax season can be stressful, but tax software, like any of these industry-trusted brands, is ready and willing to help you sort through it all. Here are a few more tips for those using apps like Cash App or PayPal for payments:

  • Keep track of all earnings separately, making verifying all income much easier when it’s time to file.
  • Keep a log of all tax deductions, as well as a physical file of all your receipts.
  • When in doubt, hire a professional, especially if you earn more than $36,000 per year through payment apps like these.

Taxes are important, and the last thing you want is a call from the IRS asking you to pay up. Doing things the wrong way is never worth the hassle. Save yourself time and frustration by staying vigilant about your income all year.

Keep reading

Give wisely: Before you donate money, check the charity’s rating

Here’s how much Amazon will pay to collect more of your data

Tech smarts in 2 minutes a day

Get my Daily Tech Update and the Digital Life Hack. Just one minute each and arm you with the tech knowledge you need to impress your boss and friends with how smart you are.