Venmo Tax Rules: 1099-K Reporting and Estimated Payments

Money you receive through Venmo for goods, services, or side work is taxable income, and you report it on your federal return by April 15, 2026, whether or not Venmo sends you a tax form. The Venmo tax rules changed in July 2025: after Congress passed the One, Big, Beautiful Bill Act, the 1099-K reporting threshold went back up to more than $20,000 and more than 200 transactions in a year.¹ Far fewer users will get a 1099-K under that standard, but the tax you owe on Venmo earnings has not changed.

When Venmo Sends You a 1099-K

For tax year 2025 and after, Venmo is only required to issue a Form 1099-K when your goods-and-services payments both exceed $20,000 and come from more than 200 separate transactions.² Miss either half and no form is required. Take in $25,000 across 150 payments and Venmo doesn’t send one. Rack up 250 payments totaling $18,000 and the same is true.

This standard was restored by Section 70432 of the One, Big, Beautiful Bill Act in July 2025.³ If you already received a 1099-K for 2024 under the transitional $5,000 threshold, the IRS has posted guidance for that specific situation on its FAQ page.¹

When you do cross the threshold, the 1099-K appears inside the Venmo app under settings, in the tax documents section.⁴ Venmo needs your Social Security number or ITIN to prepare it. If you don’t provide that information, Venmo is required to withhold 24% of your incoming goods-and-services payments and send it to the IRS.⁵

Which Venmo Payments Actually Count

Only payments tagged as “goods and services” count toward the threshold. The sender picks that label when they send the money, and the tag comes with a small transaction fee and buyer protection.⁵ Any payment to a Venmo business profile is automatically classified this way.

Personal transfers between friends and family, like splitting a dinner check or sending a birthday gift, are not counted. The classification is locked in at the moment of payment, so you cannot recategorize a transaction after the fact. Errors happen: a friend paying you back for concert tickets accidentally picks the goods-and-services option, and now that amount rolls into your 1099-K total. Fixing that kind of mistake is covered further down.

You Owe Tax Whether or Not a Form Arrives

The threshold decides when Venmo reports to the IRS. It does not decide whether you owe tax. Sell $8,000 of handmade jewelry through Venmo in 2025 and every dollar of profit is still taxable, even though you’re nowhere near $20,000 and no 1099-K will be issued. The 1099-K is an informational form for the IRS; your obligation to report income exists on its own.

The higher threshold creates a real risk of misunderstanding here. Some people will assume that no form means no taxes. That is not how it works. The IRS expects all income, from any source and by any payment method, to be on your return.

How to Report Venmo Income on Your Return

Most gig workers, freelancers, and small sellers report Venmo business income on Schedule C (Form 1040), which is where you calculate net profit after expenses.⁶ Rental income belongs on Schedule E instead. If a 1099-K was issued, the gross income you report needs to be at least the amount shown on the form; a lower number gets flagged by the IRS matching system.

Two things follow from that Schedule C filing. First, you’re taxed on net profit, not the gross number on the 1099-K, so legitimate business expenses matter. Common deductions include:

Supplies and materials used to make or deliver what you sell
Vehicle expenses, either actual costs or the standard mileage rate for business driving
A portion of home costs if part of your home is used exclusively for business
Business meals with a clear business purpose, subject to specific limits
Depreciation on equipment and business property, or an immediate write-off under Section 179
The Venmo transaction fees charged on goods-and-services payments

Keep receipts and records for every expense; you don’t send them in with your return, but you’ll need them if the IRS reviews it.⁶

Second, self-employment tax applies on top of income tax. The combined rate is 15.3% (12.4% Social Security and 2.9% Medicare).⁷ For 2026, the Social Security portion applies to the first $184,500 of combined wages and self-employment income; Medicare has no cap.⁸ W-2 workers split these taxes with their employer at 7.65% each; when you’re self-employed, you pay both halves. On $40,000 of net Venmo business income, that’s roughly $6,120 in self-employment tax before any income tax is calculated. You can deduct half of the self-employment tax as an adjustment to income on Schedule 1.⁹

The 2025 return is due April 15, 2026.¹⁰ Form 4868 gives you an automatic extension to file, but not to pay.¹¹

Quarterly Estimated Tax Payments

Venmo does not withhold income tax from what people pay you. If you expect to owe $1,000 or more in federal tax for the year after any withholding from a W-2 job, you’re generally required to make quarterly estimated payments.¹² Skipping them means an underpayment penalty in addition to the tax itself.¹³

For the 2026 tax year, the quarterly deadlines are:

April 15, 2026, for income from January through March
June 15, 2026, for April and May
September 15, 2026, for June through August
January 15, 2027, for September through December

You avoid the penalty by paying at least 90% of your current-year tax or 100% of your prior-year tax, whichever is smaller. If your 2025 adjusted gross income was over $150,000, the prior-year figure is 110% instead. Use Form 1040-ES to calculate each payment.¹²

Fixing a 1099-K That’s Wrong

If your 1099-K sweeps in personal transfers a friend mistakenly tagged as goods and services, or the total is otherwise incorrect, ask Venmo for a corrected form. You can start the request through your Venmo account, and the issuer’s name and phone number are printed in the upper left corner of the form itself.⁴¹⁴ Keep copies of every message.

If Venmo does not issue a corrected form in time, you can zero out the error on Schedule 1 (Form 1040). Report the wrong amount on Part I, Line 8z as “Form 1099-K Received in Error,” then enter the same amount as a negative on Part II, Line 24z with the same label. The net effect on your adjusted gross income is zero.¹⁴ Keep a log of the specific transactions and dates so you can back up the adjustment if asked.

Selling Personal Items Through Venmo

Selling a used couch or old electronics for less than you originally paid is not taxable, but the payment might still land on a 1099-K if it was tagged as goods and services. You can’t deduct the loss, but you can zero out the income so you don’t pay tax on it. The IRS gives you two ways: report the payment at the top of Schedule 1 and offset it there, or report the sale on Form 8949, which flows to Schedule D.¹⁵ If you sold a personal item for more than you paid, the profit is a taxable capital gain, which comes up mostly with collectibles or items that appreciate.

What Happens If You Don’t Report It

When the income on your return is less than the 1099-K on file, the IRS matching system catches the gap. The accuracy-related penalty for underreporting is 20% of the underpaid tax, and the IRS specifically identifies failure to include income shown on an information return like a 1099 as the kind of negligence that triggers it.¹⁶ A “substantial understatement” exists when you understate tax by either 10% of the correct amount or $5,000, whichever is greater. Interest also runs from the original due date. Keep your Venmo transaction records, 1099-Ks, and expense receipts for at least three years after filing; six years is a safer cushion if you have significant self-employment activity.¹⁷

1
Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill
2
Internal Revenue Service. Understanding Your Form 1099-K
3
Internal Revenue Service. One, Big, Beautiful Bill Provisions
4
Venmo. Accessing Your Tax Documents
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Venmo. Venmo Tax FAQ
6
Internal Revenue Service. Instructions for Schedule C (Form 1040)
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Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
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Social Security Administration. Contribution and Benefit Base
9
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
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Internal Revenue Service. Pay Taxes on Time
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Internal Revenue Service. Due Dates and Extension Dates for E-file
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Internal Revenue Service. Estimated Tax for Individuals
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Internal Revenue Service. Topic No. 306, Penalty for Underpayment of Estimated Tax
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Internal Revenue Service. Actions to Take if a Form 1099-K Is Received in Error or With Incorrect Information
15
Internal Revenue Service. What to Do With Form 1099-K
16
Internal Revenue Service. Accuracy-Related Penalty
17
Internal Revenue Service. How Long Should I Keep Records