Is Venmo Sending Tax Documents to Users of the App?

First off, what’s Venmo?

For those who aren’t familiar, it’s a popular financial app that allows for convenient cash exchange between friends and family. Unlike banks which may have transfer fees to outside financial institutions, Venmo allows for cash transfer between users of the application without a fee regardless of which bank they use. You can link your bank account directly to the app, and when desired, deposit or withdraw cash from the app to/from your bank account. For many, this makes splitting bills at dinner, booking vacations, or paying for entertainment as a group easier.

It has been reported that Venmo would begin issuing 1099K tax forms showing total amounts received during the calendar year for goods and services. Amounts shows on 1099K are taxable revenue that must be reported as income on your tax return.  We have heard concerns from a few tax clients who use the application that they are not sure if they will be getting this form, and if they do, why they would need to report amounts received from friends for splitting dinner costs as income.

To clear up the matter, we have reviewed Venmo’s policy for tax year 2021. All indications are that these tax forms will only be sent to those who have a business account with Venmo. Venmo business account owners who have over $600 in transactions for the year should expect this form, and should provide it to their tax preparer. Personal accounts will not be receiving this form. This makes sense, as it would be impossible for Venmo to decipher what is personal vs. business activity in a personal account. However, we would like to point out that payments received in a personal Venmo account that are business related (rental income payments or payments for goods and services) are still taxable income that should be reported on your tax return regardless of whether or not you receive a tax form.