Venmo and our parent company, PayPal are required to report payment activity and provide tax documents in certain situations. Read on to learn about this year’s reporting requirements.
Have more questions about how tax reporting works on Venmo? Check out our general Tax FAQ.
You can also visit the IRS website for help understanding Form 1099-K and other tax documents you may receive.
IRS Reporting Thresholds for Tax Year 2024
For the 2024 tax year, the IRS reporting threshold for payments received for sales of goods and services is $5,000.
The following states will use a lower threshold:
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Maryland (MD): ≥ $600
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Massachusetts (MA): ≥ $600
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Vermont (VT): ≥ $600
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Virginia (VA): ≥ $600
- Illinois (IL): > $1,000 and 4+ separate transactions
Venmo and PayPal will file Form 1099-K for any customer who met the reporting threshold or was subject to backup withholding during 2024. Customers who had backup withholding applied during the year can claim a credit or refund for backup withholding when filing their tax returns with the IRS.
Please see IRS Notice 2024-85 for more information about the latest reporting threshold changes.
Impact of New Reporting Thresholds for 2024
Money on Hold
- Given the IRS’s initial directive to implement a $600 reporting threshold for the 2023 tax year, PayPal and Venmo have been placing funds on hold to meet tax requirements when customers do not have a Tax Identification Number on file and exceeded receiving $600 in payments from goods and services.
- Due to the IRS delaying the implementation of the $600 threshold, PayPal and Venmo will exempt users who do not meet the revised 2024 tax year federal threshold of $5,000 received for goods and services transactions and/or the state threshold.
Tax Documents You May Receive
- PayPal and Venmo will file Form 1099-K for any customer who was subject to backup withholding during the 2024 tax year, regardless of total payments for the year. This form will include the total amount of backup withholding PayPal or Venmo sent to the IRS on your behalf before the thresholds were changed by the IRS. In the case where an individual state has a lower threshold, PayPal and Venmo will report accordingly.
Customers with Backup Withholding
- PayPal and Venmo withheld money from certain accounts that were missing tax information at a rate of 24 percent, as required by the IRS. We will issue customers a Form 1099-K and they will be able to claim a credit or refund of the backup withholding when they file their own taxes with the IRS. For more information, visit the IRS website here and here.
IRS Reporting Thresholds for Previous Years
The IRS plans to implement the $600 reporting threshold for third-party settlement organizations but has provided a transition period spanning the last few years. As a result, the reporting threshold has changed several times. Previous years’ reporting thresholds were as follows:
- 2022: $20,000 and 200 transactions, with lower thresholds for some states
- 2023: $600 initially; deferred to the prior threshold of $20,000 and 200 transactions, with lower thresholds for some states
- 2024: $600 initially; deferred to a transitional threshold of $5,000, with lower thresholds for some states
This threshold applies to individuals, sole proprietors, and registered businesses who received payments for the sale of goods and/or services using Payment Settlement Entities like Venmo (and similar services).