Information provided by Venmo is not intended to be and should not be construed as tax advice. For questions about your specific tax situation, please consult a tax professional.
What are the current tax laws?
Venmo's IRS 1099-K tax reporting requirements only pertain to payments received for sales of goods and services and DO NOT apply to friends and family payments.
For the 2024 calendar year, the IRS will require reporting of payment transactions for goods and services sold that exceed $5,000, irrespective of the number of transactions. Some states have lower reporting thresholds:
- Maryland (MD): ≥ $600
- Massachusetts (MA): ≥ $600
- Vermont (VT): ≥ $600
- Virginia (VA): ≥ $600
- Illinois (IL): > $1,000 and 4+ separate transactions
Anyone who meets the applicable reporting threshold for payments received for goods and services through Venmo (or any other payment app) can expect to receive a Form 1099-K.
PayPal and Venmo 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
To determine whether specific amounts on your 1099-K are classified as taxable income, you should speak with a tax professional. This information is not intended to be and should not be construed as tax advice.
Learn more about reporting thresholds for the current tax year.
Why does Venmo need my tax info?
When you receive payments for goods and services on our platform, the IRS requires Venmo to report that payment activity if you reach the reporting threshold for these transactions.
You can find the latest info about the current tax year’s reporting thresholds on the IRS website.
If you reach the reporting threshold and have not provided your tax information in the Venmo app, you will experience backup withholding.
What makes a payment goods and services?
When sending money on Venmo, users can choose to tag a payment as being for “goods and services”.
Whether it’s for a product you sell, a service you provide, or even an old couch you don’t want anymore, the person paying for the item or service can decide whether to tag the payment. All payments sent to business profiles on Venmo are tagged as purchases automatically and are therefore considered to be for goods and services.
What happens after I provide my tax info?
By providing your tax info, you’re complying with IRS requirements for receiving payments for goods and services. Taking this step enables us to provide accurate information on tax forms you may receive from Venmo. By providing your tax information early (before you reach a reporting threshold), you can also avoid experiencing tax holds on your payments and subsequent backup withholding.
If you don’t end up qualifying to receive tax documents for the year, you can download your Venmo account statements to help you with any other reporting obligations you may have. You may also wish to seek the advice of a licensed tax advisor.
What if I don’t provide my tax info?
If you reach the reporting threshold for the sales of goods and services through a payment settlement entity without first providing your tax info, that payment settlement entity (i.e. Venmo) is required to withhold 24% of those payments and send it to the IRS for backup withholding. This is required by the IRS and helps to ensure that any applicable taxes due on these payments are paid.
If you do nothing, you’ll continue to experience tax holds and 24% backup withholding on the payments you collect for goods and services throughout the year. In this event, we’ll still send you and the IRS a Form 1099-K.
What is backup withholding?
Backup withholding is when a portion of your payments is sent to the IRS to ensure that any tax due on those payments is paid. Without your tax ID, we’re required to send 24% of each payment you receive for goods & services to the IRS as backup withholding to cover any potential income tax due.
If the full 24% of a payment is not available in your account at the time of a backup withholding date, we may need to collect backup withholding in multiple increments from your Venmo account.
Can I get my backup withholding money back?
Funds sent to the IRS for backup withholding cannot be returned to you, but you can report the backup withholding on your tax return. For any questions about how this affects your taxes, please consult a licensed tax advisor.
Please note, if you’ve reached the backup withholding date for payments you received for goods and services without providing your tax ID, there isn’t a way to stop Venmo from collecting the 24% due to the IRS.
Why was backup withholding taken from payments I received before reaching the reporting threshold?
If you don’t provide your tax ID prior to your first backup withholding date, Venmo is obligated to send 24% backup withholding to the IRS for all of the payments you received for goods and services for the current tax year. This includes payments you received prior to meeting the reporting threshold.
Please note that any amounts due to the IRS may be withheld from your Venmo account or removed from future payments received.
Where does the 24% come from? Is this taken from my payments before taxes and fees or after?
24% is a standard withholding rate set by the IRS. If backup withholding is due on your payments, it will be taken from the gross amount you receive before taxes and fees are applied.
Can I pay off my backup withholding another way?
We’ll only use funds in your Venmo balance (or held balance) to cover any amounts you owe for backup withholding.
Without your tax ID, we’re required to send 24% of all payments you receive for goods and services to the IRS after you meet the reporting threshold for the current tax year. There isn’t another way for us to send your backup withholding to the IRS.
What is a backup withholding date?
Backup withholding is sent to the IRS once per month on a predetermined date. The date you see on Venmo is the date when your backup withholding funds will be sent to the IRS.
Why is my money on hold?
To give you some time to add your tax ID and stay compliant with tax laws, we’ll place your payments on hold for an initial grace period once you meet the reporting threshold by receiving payments for goods and services through Venmo. After this initial grace period, we’ll be required to start sending 24% of your payments to the IRS for backup withholding.
Because backup withholding is sent to the IRS monthly, you may see future payments on hold if you choose not to provide your tax ID by the next backup withholding date.
It’s also possible that your payment is on hold for a different reason.
What’s a Form 1099-K?
Form 1099-K, Payment Card and Third Party Network Transactions, is a tax form used to report payments for goods and services transactions. Organizations that facilitate these payments, like debit/credit card companies, PayPal, Stripe, Venmo, Etsy, Upwork, and many others, are required by law to file them with the IRS and send copies to the payment recipient.
What if I just go sell on another payment platform?
All payment settlement entities, including PayPal, Stripe, and Square, have the same IRS obligation.
Is Venmo keeping my money?
No, Venmo is not keeping your money. Payments placed on tax hold are in your account, but they're unavailable to you until you provide your tax info or until the next backup withholding date. By providing your tax info, you and Venmo are acting in compliance with the new IRS requirements.
Did my buyer complete their payment?
Yes. Held payments have nothing to do with your buyer and you should feel confident about providing them with your goods and/or services. Their payment is waiting for you in your Venmo account. You just can’t access it until you provide your tax info.
This information is not intended to be and should not be construed as tax advice. You should consult your tax advisor regarding your reporting of these transactions.