Note: The IRS has delayed the implementation of the $600 reporting threshold for payment transactions for goods and services by one year. For the tax year 2022, the IRS will continue to use the reporting threshold of total payments exceeding $20,000 for goods and services and more than 200 transactions. Some states have lower reporting thresholds. Read on for more information.
What are tax holds?
Due to IRS reporting thresholds, you will need to provide Venmo with your tax information if you’re receiving payments for sales of goods and services.
To help ensure compliance with federal regulations, payments received for sales of goods and services in excess of the $600 reporting threshold will be placed on hold if we don't have your tax information. You will have an initial grace period to provide your tax ID after meeting the threshold, after which point your held payments will be subject to 24% backup withholding. You will continue to experience holds and monthly backup withholding until you provide your tax information.
If you haven’t received any payments for sales of goods and services, this won’t affect you. If you do receive these payments, we’ll let you know once you’re approaching the $600 threshold and whether any of your payments are on hold.
Learn more about what’s new for tax reporting in 2023 here.
I received a notification asking me to provide my taxpayer information. What should I do?
If you received this notification, it means that the total value of payments you’ve received for sales of goods and services on Venmo meets or exceeds IRS reporting thresholds for this kind of income.
You can provide your tax ID in your Venmo app – just follow the prompt from your Notifications page or look for Identity Verification under your Settings.
- If you already have payments on hold, you should also see a notification on the Me tab or your business profile home screen in the Venmo app
- Your “Payment details” pages will also have a button so you can “Provide tax info” if needed
Providing your tax ID ahead of time can help you avoid tax holds and backup withholding, so you can access your money faster.
Learn more about identity verification on Venmo.
Why is Venmo sending my money to the IRS? I didn’t send these payments.
If you see outgoing payments to the IRS from your Venmo account, those payments account for backup withholding due on the payments you received. You can tap on any of these outgoing payments to view additional details, including a link to the original payment you received.
Remember: You can provide your tax ID in the Venmo app to avoid backup withholding on your payments.
What is backup withholding? Why is this happening?
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.
Remember: You can provide your tax ID in the Venmo app to avoid backup withholding on your payments.
Learn more about backup withholding on the IRS website.
I already provided my taxpayer info. Why is my payment on hold?
If you’ve already provided your taxpayer information, you may still experience payment holds for a few different reasons. Read more about payment holds and what can cause them.