ROCHESTER, NY (WROC) – As cash payment apps like Venmo and Zelle become increasingly popular, many people are asking the question: do I have to pay taxes on money received through these apps?
We posed this question to CPA Garrett Wagner.
“One of the 2021 tax law changes lowered the threshold from $20,000 to $600,” Wagner said. “What’s gotten lost is that they only track for businesses – not for anyone using a cash payment app. Only business transactions are tracked and it’s only who receives the money. They also don’t track who sends it.
Wagner said the IRS would not track or monitor person-to-person transactions — such as friends sharing a dinner bill.
It is possible for a person to be erroneously coded as a business. In this case, Wagner said not to panic.
“So we want to take two steps – first, contact the cash app that sent you this little letter – it should be a 1099 – and let them know, hey, ‘I’m not a business because you probably checked the wrong box.’ You make that quick dinner and try to go and hit the wrong box.Secondly, even if they don’t fix the problem in time, your trusted CPA can help you avoid any tax issues on your personal return.