So people will be taxed on venmo and zelle transactions?

[Anonymous]

How will Venmo know what is reimbursement versus income? And what to report to IRS?

[Anonymous]

Anonymous wrote:How will Venmo know what is reimbursement versus income? And what to report to IRS?

You will tell them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:From an enforcement perspective there will probably be some de minimus threshold before amounts on these 1099s even attract attention.

The cash flow isn’t taxable, the character of the cash flow potentially is.

But they aren’t going notice $1,000 reimbursement for a group vacation. That isn’t how the IRS works.

Their systems pick up any discrepancy in reported income and what's on the return. They most certainly will notice it and you will get a letter. I've gotten these for issues of less than $100. I think most people who just have W-2 income don't realize how this works because their returns are very simple and mistakes are not common.

In this case, they likely will not because a 1099-K will not be automatically considered income. Other 1099s, like 1099-NEC for example, is always income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:From an enforcement perspective there will probably be some de minimus threshold before amounts on these 1099s even attract attention.

The cash flow isn’t taxable, the character of the cash flow potentially is.

But they aren’t going notice $1,000 reimbursement for a group vacation. That isn’t how the IRS works.

Their systems pick up any discrepancy in reported income and what's on the return. They most certainly will notice it and you will get a letter. I've gotten these for issues of less than $100. I think most people who just have W-2 income don't realize how this works because their returns are very simple and mistakes are not common.

This isn’t true. Their “system” isn’t that sophisticated.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:From an enforcement perspective there will probably be some de minimus threshold before amounts on these 1099s even attract attention.

The cash flow isn’t taxable, the character of the cash flow potentially is.

But they aren’t going notice $1,000 reimbursement for a group vacation. That isn’t how the IRS works.

Their systems pick up any discrepancy in reported income and what's on the return. They most certainly will notice it and you will get a letter. I've gotten these for issues of less than $100. I think most people who just have W-2 income don't realize how this works because their returns are very simple and mistakes are not common.

This isn’t true. Their “system” isn’t that sophisticated.

Matching forms to returns is not sophisticated, and they definitely do it. https://www.irs.gov/statistics/soi-tax-stats-...ompliance-activities

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The only transactions being reported are the ones where you select you are paying for “goods and services”. If you select you are just sending to friends or family, it is not being reported.

I don’t have that option on Venmo…?

There must be an option for goods and services because my neighbor sent me money for my teen doing yard work and a percentage was taken out. It said something like ‘services’ in the transaction. I don’t know where that option is though.

When you make a Venmo purchase (at least on my phone), when you try to make a payment it have a line that says your balance and then a button that says "Turn on for purchases". The first time I paid someone, I turned it on, thinking that it was to turn on payment by my Venmo balance vs paying on my credit card. But if you turn that on, you are paying for purchase of "goods and services" (which is what Paypal calls that). That takes out a transaction percentage for Venmo. If you leave that button off, then it sends money like the Paypal "Friends and family" option.

It was confusing. Most likely your neighbor turned that on or has it default on in their Venmo settings. It was most likely a user error by your neighbor.

[Anonymous]

Anonymous wrote:I never gave venmo my SSN, and they limited my account so all I can do is transfer money into my bank account, and all payments have to go from my bank account (vs. using money that is in venmo to pay other people, for example)

I'm assuming that means I won't get a 1099 from venmo, since the bank eventually gets all money, right?

It depends. What were you paid money for? If it was for selling things or providing services then you still owe taxes. Having it go into your bank account later doesn't change that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The only transactions being reported are the ones where you select you are paying for “goods and services”. If you select you are just sending to friends or family, it is not being reported.

I don’t have that option on Venmo…?

There must be an option for goods and services because my neighbor sent me money for my teen doing yard work and a percentage was taken out. It said something like ‘services’ in the transaction. I don’t know where that option is though.

When you make a Venmo purchase (at least on my phone), when you try to make a payment it have a line that says your balance and then a button that says "Turn on for purchases". The first time I paid someone, I turned it on, thinking that it was to turn on payment by my Venmo balance vs paying on my credit card. But if you turn that on, you are paying for purchase of "goods and services" (which is what Paypal calls that). That takes out a transaction percentage for Venmo. If you leave that button off, then it sends money like the Paypal "Friends and family" option.

It was confusing. Most likely your neighbor turned that on or has it default on in their Venmo settings. It was most likely a user error by your neighbor.

Okay, but if it was for lawn care it was in fact a service and the neighbor was right to turn it on.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I received about $1000 for a large Fourth of July party from several family members and put it all towards the food and drinks. Will this be taxed?

No. Nothing has changed regarding what's taxable income.

But Venmo is going to send a form to the IRS saying they sent me these payments, no?

Right, depending on how your Ex sent the money. But no matter what, this form doesn't change whether or not you owe taxes.

I don't know if you need to pay taxes on child support. I wouldn't think so, but this form doesn't change that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I received about $1000 for a large Fourth of July party from several family members and put it all towards the food and drinks. Will this be taxed?

No. Nothing has changed regarding what's taxable income.

But Venmo is going to send a form to the IRS saying they sent me these payments, no?

Right, depending on how your Ex sent the money. But no matter what, this form doesn't change whether or not you owe taxes.

I don't know if you need to pay taxes on child support. I wouldn't think so, but this form doesn't change that.

So, I looked it up and you don't need to pay taxes on child support.
https://www.irs.gov/faqs/interest-dividends-o...0payments%20received

[Anonymous]

Anonymous wrote:Right, very little of the money I'm receiving via Venmo is income -- usually it's someone paying me back for an expense I covered all of and then we split after the fact. That isn't taxable. How am I supposed to report it to the IRS?

You aren't?

[Anonymous]

Anonymous wrote:Yi think it’s only if it’s flagged as business. I allowed someone to use my beach house for only the cleaning fee. Instead of sending me the money as friend to friend he freaking flagged it as a business transaction. Not only die venmo take a slice now I’m gonna get a freaking 1099.

But you don't magically owe taxes on it. Because you didn't make a profit. You were reimbursed for the cleaner you contracted.

[Anonymous]

Anonymous wrote:Practically I think this is kind of a disaster. People who run small businesses have been using it as a tax cheat, but it’s going o be hard to distinguish between those people and the people that are collecting money for the class teacher gift or the shared summer rental or whatever. I’m not sure what the irs is going to do with all this information.

If you didn't report something as income and they think you should, they will send you a letter (for a small subset of people) asking for an explanation. You explain away! That should be the end of it.

I've received letters from the IRS for not checking a box on some forms, so this is not a big deal as some fearmongers would have us believe.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Right, very little of the money I'm receiving via Venmo is income -- usually it's someone paying me back for an expense I covered all of and then we split after the fact. That isn't taxable. How am I supposed to report it to the IRS?

You aren't?

I guess we'll see if Venmo really does only send a 1099 for "goods and services" payments -- otherwise, this other kind of transaction will generate records sent to the IRS, which will mean that if you don't report them, they'll think you're failing to disclose income. (Which happened to me once for uncovered short sales of stock, and I got a letter from the IRS that I had to reply to to avoid a large additional tax bill.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Right, very little of the money I'm receiving via Venmo is income -- usually it's someone paying me back for an expense I covered all of and then we split after the fact. That isn't taxable. How am I supposed to report it to the IRS?

You aren't?

I guess we'll see if Venmo really does only send a 1099 for "goods and services" payments -- otherwise, this other kind of transaction will generate records sent to the IRS, which will mean that if you don't report them, they'll think you're failing to disclose income. (Which happened to me once for uncovered short sales of stock, and I got a letter from the IRS that I had to reply to to avoid a large additional tax bill.)

Okay, but you owed taxes in that case. In the case of a reimbursement you wouldn't owe taxes so they wouldn't ask you to pay them.