May 20, 2025 • 24 mins
Unpacking the Venmo Tax: What You Need to Know for 2025
Join Chris Picciurro, CPA, and John Tripolsky as they explain the so-called "Venmo Tax" and how third-party payment platforms will impact your tax reporting. Learn about the changing thresholds for 1099-K forms and what everyday Venmo users need to know.
KEY TAKEAWAYS:
- 2025 Threshold: Only $2,500 in transactions triggers a 1099-K form
- 2026 Threshold: Set to drop further to just $600
- Taxable vs. Non-Taxable: Not all Venmo transactions are taxable income
- Common Triggers: Splitting bills, group purchases, and gifts can all generate forms
- Handling Incorrect 1099-Ks: How to properly report forms received in error
EPISODE BREAKDOWN:
- Understanding Third-Party Settlement Organizations (TPSOs)
- The Changing 1099-K Thresholds (2023-2026)
- Which Transactions Are Actually Taxable
- Everyday Examples That Can Trigger Forms
- How to Handle Incorrect 1099-K Forms
SPONSORED BY:
Legacy Lock
Visit teachingtaxflow.com/legacy for easy estate planning from home
- (00:00) - Understanding IRS Rules for Venmo and Similar Platforms
- (04:33) - Understanding the Implications of the Venmo Tax
- (09:58) - The Rise of Digital Payments and Their Everyday Impact
- (13:41) - Understanding 1099-K Threshold Changes and Their Implications
- (15:27) - Understanding 1099K Reporting for Personal and Business Transactions
- (21:07) - The Impact of Cashless Transactions on Tax Filing Complexity
- (21:08) - Handling 1099K Errors in Personal Transactions
- (22:46) - The Complexities of Tax Reporting and Financial Advice
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
John Tripolsky (00:03):
Hey, everyone, and welcome back to the teaching
tax full podcast episode 136today. We are looking at Venmo.
Yes. You heard it right. Venmo,one of the most popular payment
peer to peer business tobusiness transaction DIY
platforms out there.
But what we're looking at todayare some twenty twenty five
rules that the IRS has in placeand how they look at this
(00:26):
platform and there are similarones out there. But before we do
that, as always, let's take abrief moment and thank our
episode sponsor.
Ad Read (00:37):
This podcast is brought to you by Legacy Lock. If you
are new to estate planning orsimply need to review your
current plan, Legacy Lock makesit as easy as pie. Legacy Lock
is a unique platform thatenables you to easily complete
your attorney drafted documentsconveniently from the comfort of
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simply visitingteachingtaxflow.com/legacy.
John Tripolsky (01:01):
Hey, everybody, and welcome back to the podcast.
Now today, we're gonna talkabout a topic I know Chris
Piquiro is extremely, extremelyexcited about. I'm just kidding.
He's not too excited about it.Who is really excited about
talking about a topic?
Right? If you're getting anyrevenue, say, who wants to be
(01:24):
taxed on that? Right? So we'regonna talk about a lot of these
stuff or should say a little bitabout it because there's a lot
of stuff going out there aboutit, but we just wanna give you
really the the nuts and bolts,if we will, around platforms
such as Venmo. You have PayPal.
Cash App is one of them, andthere's a whole ton of these
things out there. So what we'regonna get into, again, not too
deep into the weeds, but whatyou can expect a little bit
(01:47):
about some changes from the IRSas it relates to these
platforms. So as I mentioned, Iknow it's his favorite topic to
discuss. Chris Pacquiro, welcomeback, buddy. How's it going
today?
Chris Picciurro, CPA (01:56):
It is going very well. How are you
doing today?
John Tripolsky (02:00):
Doing good, man. Doing good. I I did not you know
what? I should say, I will Venmoyou a couple bucks for doing
this topic with me. I know.
I know. And I know you're notexcited about it because there's
a million other things in yourworld that excite you way more
than this.
Chris Picciurro, CPA (02:16):
That's true. But you know what? We have
to think about the teaching taxflow community and what's best
for them, and this is somethingthat's gonna affect a lot of
them. As you know, first of all,thank you so much for watching.
Thank you for listening.
We truly appreciate you. Withoutyou, we wouldn't be doing this.
We want you if you're notalready, we want you in the
(02:36):
defeating taxes private Facebookgroup. Go to defeatingtaxes.com.
Remember, you can always postanonymously.
The other thing, which I'm gonnacall it this is our fuel tank,
John, our YouTube channel.Teaching Tax Full YouTube
channel, that's our fuel tank.So please pump some gas in our
fuel tank. Guess what? It'sgonna be free gas.
It's not like what you're payingat the pump right now. All you
(02:58):
have to do is check it out, giveus a like, and, and a follow
because that helps us bring youthe content. And this makes me
maybe tackle some topics thataren't my personal favorite, but
I know that the community needsit. So, so thank you, first of
all. We are loving all theinteraction.
And, you know? And then and and,again, if you have any questions
(03:21):
about this, go to 2025.tax. Justdrop an inquiry in. We're happy
to help. Now this topic, we callit the Venmo tax.
Social media calls it the Venmotax. But but what this is is
it's something that has comeabout over the last few years
with IRS. It's a topic that weactually taught, in our tax
(03:43):
season updates. I'm very honoredto be one of the National
Association of Tax Professionalsinstructors. I got a chance to
speak to about three to 400 taxprofessionals last year.
I think we're gonna probably hitmore than that this year. And
this was a topic. So peer topeer, tax professionals are also
learning about this topic andeducating ourselves. When I
(04:04):
taught this topic, I like tocall it the Taylor Swift tax.
Now, Taylor is to the best of myknowledge and, because I have a
fifteen year old daughter nowthat gives me updates.
She is now focusing, or she isnow not on tour anymore, so I
don't know that I can call itthe Taylor Swift tax. Maybe
we'll find something else. Maybewe'll call it the Savannah
(04:26):
Banana or the, some othertouring organization's tax. And
you might say, well, why isthat? Well, let me paint a
picture for you, John.
Let's well, I know you're aSwifty. You've been outed many
times as a Swifty. It goes alongwith some of your other
questionable music choices,which will remain unnamed. But
(04:47):
let's say John says, you knowwhat? My daughter's daycare.
I'm getting all the dadstogether, and we're gonna go to
the Taylor Swift concert. Andit's a very expensive concert to
go to, but so he buys 10tickets, and for $300 a ticket.
John Tripolsky (05:03):
That's a steal.
Chris Picciurro, CPA (05:04):
It is a steal, actually. And and then
he's he just says tells theother dads, don't worry about
it. Venmo me $300 for yourticket. No big deal. John's not
in the business of taking groupsto the t sizzle concert or doing
special events.
However, there's an unintendedconsequence. John will now get a
(05:26):
$10.99 at the end of the year,most likely, because of his
Venmo activities. And there's alot of innocent things happening
out there that that arereporting nightmares for
taxpayers. I'll give you acouple more examples that I have
personally witnessed in ourprivate CPA firm. One, the Cub
Scout popcorn or Girl Scoutcookie, leader.
(05:50):
Right? You go to Kroger. You goto my you go to your grocery
local grocery store. You buyeither Girl Scout cookies or Cub
Scout popcorn. You Venmosomeone, and it's typically one
of the parents of theparticipants.
And they bring in thousands andthousands of dollars of Venmo.
They're not in the business ofpeddling popcorn or cookies, and
(06:10):
they transfer that money over tothe organization to purchase
said, product. They haven't madeno money. They're not in the
business of doing it. However,they could very well be getting
tax forms in the mail.
That can happen all the time.The final one I'll talk about is
for those of you that playfantasy football, or let's say
(06:31):
you are in a pickleball league.Our our pickleball league, we is
a is a couple hundred dollars ayear total to be in, very
modest, but we've got about 90guys in the league. That's a
significant amount of Venmotransactions occurring for no
real profit for the personorganizing it. So that is those
are the unintended consequencesof what we call the Venmo tax.
(06:53):
So what are the rules? Well, weknow that these digital payments
have become more popular andpopular, and the IRS is seeing
that there could be income thatis going unreported. Now we call
the Venmo tax. John, youremember when we were kids of
course, I'm a couple years olderthan you, and you happen to,
enjoy reminding people that I'ma decade older than you,
although you just look odometer.But so we would say, hey.
(07:19):
Can you pass me a Kleenex? Canyou throw me a Coke? Right? We
know Kleenex is really a facialtissue. So we know Coke is a
soft drink.
John, we're from Michigan, wecall it pop. People down here in
the South call it soda.
John Tripolsky (07:34):
Mhmm.
Chris Picciurro, CPA (07:35):
I don't understand that, but that's a
whole another episode.
John Tripolsky (07:37):
I love I love throwing people a curveball.
When I lived in when I lived inSouth Carolina, it's like, oh,
is it a soda pop then? They'relike, well, no. It's just soda.
Well, to me, it's just pop, soI'm I'll compromise.
But
Chris Picciurro, CPA (07:48):
Exactly. And a lot of people say, hey.
I'll have a Coke. They mighthave a Pepsi. They might have an
RC Cola.
It's the point is when we saythe Venmo tax, it applies to
Venmo, PayPal, Cash App, andseveral other what what are
called TPSOs, third partysettlement organizations.
Alright? And these are theorganizations that collect money
from one party, transfer it tothe other party. And now here in
(08:13):
2025, a new threshold for, tenninety nine k reporting does
take effect. A ten ninety nine kis the tax form that is required
if you go over the threshold forfor third party network
transactions.
So we'll put a link into theshow notes to a ten ninety nine
(08:35):
k, and, technically, it's apayment card and third party
network transactions tax form.So there are a lot of people
that are doing some what we callinnocent activities. You know,
there's Giant, when yourdaughter's getting older, you're
gonna realize as you and yourwife I know you're very involved
with the community, but andyou're gonna continue to realize
that no good deed goesunpunished. That is a % true. So
(08:55):
as you volunteer for things and,hey.
You know, I'll be classroom dador the classroom mom and Venmo
me money for the teacher gift,and all of sudden, I've got a
tax form. So the but the the$10.99 k is a tax form you can
you will receive if you go overwhat we call the threshold. And
that threshold did change in for2025. It actually got reduced.
(09:22):
Throw what the what thresholdmeans is that if you go over
that dollar amount in these TPSOtransactions for the year, you
will receive a ten ninety ninek.
John Tripolsky (09:35):
And I'm really glad, Chris, that you did go
over to it before we discusswhat those thresholds are
actually. So I'm glad that youbrought up that Kleenex example.
Right? Because I I feel likethere's these platforms are so
user friendly. Right?
It's like, I wouldn't saycareless or anything done well,
let's be honest, people areusing them maliciously.
(09:56):
Whatever. It is what it is. Itcan't stop everybody. But it's
been it's almost like part ofour daily lives.
Right? Where nobody I was gonnasay nobody, but I I can't tell
you the last time I've actuallyeven given any form of currency
tangible to somebody, you know,somebody splitting a lunch bill
or or something like that.Right? So these platforms are
out there, and people are usingthem more and more and more. And
(10:18):
I would probably bet I'm justgonna randomly come up with a
number that probably less than,like, 1% of people that even use
them know that this is even athing.
Chris Picciurro, CPA: Absolutely. I mean, John, I'm (10:29):
undefined
just I've been thinking aboutjust in the last month. We my
wife and I used Venmo to tip awe we a valet driver when we
went out to to, dinner onenight. You know, we're we're not
John, I'd rather walk a fewblocks, but we were in Downtown
Nashville, you know, and, kindadressed up. So we had, you know,
(10:50):
tipping of tipping a someone ata hotel that's helping you with
your bags, typically Venmo.
I've got another example. Wethis this restaurant will not be
named. If you wanna know,though, and you're in Franklin,
Tennessee, if you wanna know theMexican restaurant, best
margaritas by far, JohnTrapolski Trapolski has graced
this place with this presence.The one drawback, which could be
(11:12):
a positive, is bad Wi Fi. It'sprobably not
John Tripolsky (11:17):
They are missing well, me and you are are, like,
notorious for finding ways todrag our laptops and our
business conversations to themost non business friendly
establishments. But, yeah, thatone I was disappointed in, man.
Nothing's better than, like,salsa and Wi Fi. Right?
Chris Picciurro, CPA (11:33):
Like But
John Tripolsky (11:33):
that's supposed to go.
Chris Picciurro, CPA (11:34):
Know. It was salsa. You you get a little
salsa on your computer. And,John, we've been to this
establishment many times. Infact, one time, it's quite quite
a it was it was the anniversaryof the establishment.
They had really good deals onmargaritas. They had a bunch of
outdoor seating, and it was itwas a very interesting
experience. We'll say that. Butwe're gonna leave that has
nothing to do with $10.99 k, buthere's why it does in in all
(11:56):
seriousness. Because my wife andI like to go to this set
establishment, we received giftcards from people to this
establishment.
So when we went to use our giftcards, no problem, we cashed
out, we paid for our meal, andwe wanted to put a tip on it.
Well, they said, just with ourcomputer system, you can't tip
(12:17):
using your gift card, which iskinda weird. Usually, can. Well,
we don't carry cash, and thispoor server just helped us. So
we we asked him, and he's like,oh, yeah.
Do my wife says, do you haveVenmo? Yeah. Can we at least
Venmo you a tip? Sure. Noproblem.
But think about that. We had totip this server in Venmo. Who
knows how many times that thatkind of stuff happens? So Right.
John Tripolsky (12:38):
It's just like live music venues. I feel like
everybody that hits a stage,that's, like, their their way to
do it. That's like a a requestthe old request buckets. You
know, where you drop a piece ofpaper, write a folder in there,
throw it in. Now it's like,don't tell us your song unless
you Venmo us.
Correct.
Chris Picciurro, CPA (12:55):
So as early as 2023, the threshold. So
when you're as you listen tothis, think about threshold is
when I have it doesn't meanthat's when you have to report
something. We're gonna talkabout that in a couple minutes.
It means when you're going toreceive the ten ninety nine k
form. That threshold for 2023was $20,000 of transactions and
200 of minimum transactions.
(13:17):
Okay? So that kinda, eliminateda lot of people from getting the
ten ninety nine k. In 2024, itwas 5,000 of transaction of of
report, transfers ortransactions, and there was no
minimum transaction. So it'ssolely based on the amount of
transactions for 2025. Only$2,500.
(13:41):
So you could easily see how thatcan happen, especially man, I
mean, think, John, think about,like, going out to how many
times have you guys gone out todinner with, like, four or five
couples? Someone, you know, putsit on their car, and then
everyone Venmo's the money. Itcan $2,500 can add up pretty
pretty quickly over the year,and then you have a ten ninety
nine k. And here's the kicker.In 2026, that threshold dips
(14:03):
down to $600.
Now we'll see if the patch comesthrough. It has happened quite
often because you gotta imaginethese third party settlement
organizations really don't wannaissue all these ten ninety nine
k's and track everything. Butthat those are the rules for
when a ten ninety nine k isissued. Now I'm gonna pause for
(14:24):
a quick second. The issuance ofa ten ninety nine k doesn't
dictate if if something'staxable or not taxable.
It really is plays a role in howwe handle our tax return if
we're issued a ten ninety nine kand we're not in the business of
of doing something that weshould be reporting that as
taxable income.
John Tripolsky (14:43):
Mhmm. And and really, Chris, I mean, I can see
this, you know, to to kind ofplay devil's advocate a little
bit for the IRS. Right? Soanybody that's listening to this
as a tax player, please do not,you know, knock me over on the
street for saying this. But,really, I wouldn't say it's I'm
not gonna say it's a good ideaall the way around.
But for them, it's a verybeneficial tool and a move, I
(15:06):
think. I mean and I don't knowhow I feel about the number,
obviously, or the number oftransactions. But think about
it. Right? Like, you have garagesales doing a couple thousand
dollars.
You have people selling thingson marketplace. You have all
this stuff. You you have somecompanies I know for a fact
paying their contractors withVenmo or PayPal or something. So
(15:28):
it's smart on their part againto kinda really look at this as
like, okay. This is reallyflying under the radar.
We know it. How are we gonna,you know, collect on that,
basically?
Chris Picciurro, CPA (15:39):
Right. I mean, think about garage sales.
When we were a kid, we wouldhave three, four families coming
together and have one monstergarage sale. And and, of course,
there was no Venmo then. But nowyou would probably have one
Venmo account, and people areshifting money back and forth.
So, again, ten ninety nine kreporting is autonomous from
reporting it as taxable income.But if you get a ten ninety nine
(16:01):
k, you have to deal with it, oryou will probably get a letter
from the IRS, and they are notgoing to give you the benefit of
the doubt. They're going to tellyou, say that it's taxable
income. So remember, you have tore you report as a US tax
resident. You report your grossincome.
You report rather your incomefrom all sources. So when we
(16:26):
talk about these ten ninety ninek's, which of these transactions
are actually taxable? So whichones are reported as taxable
income on your tax return? I'mgonna give you four most common
examples. One is gonna be yourfreelancers.
We you know, we love ourfreelancers, our gig workers
here in teaching tax flow. So itcould be a tutor. It could be,
(16:47):
anyone doing some side hustle,rather, you know, some so in in
segue of gig economy and sidehustle. So you got freelancers
are kinda separate than, youknow, side hustles and gig
economy, Uber, DoorDash, thosekind of things. A lot of times,
those are people are paid,tipped, and in Venmo.
If you're selling goods for aprofit. So let's you know, John,
there's a rumor that we might,you know, we might be writing a
(17:10):
teaching tax flow book. If wesell it on online and get Venmo,
then we that's a good sold forprofit. That's taxable income.
If you're selling things onFacebook Marketplace for profit,
that is taxable income.
If you sell your kid's old bike,that's not that's that's not a
(17:30):
taxable income. It's just it'skinda like a garage sale
situation. But you might sellyou know, you've gotta look at
the situation, and are youselling things for income and
professional services? So thoseare all things that are typical,
transactions that occur on a tenninety nine k that are taxable.
Now there could be somenontaxable reporting, and that's
(17:55):
where it gets sticky.
You get a ten ninety nine k, andyou're not in the business of of
selling things, but you justhappen to receive one due to a a
variety of reasons. The topthree ones are gonna be personal
reimbursements. Like I said,splitting. Here's a great one,
John, splitting rent. Right?
Let's say you and I rented acondo and and you Venmoed me a
(18:15):
grand a month, and I paid the$2,000 of rent. I'm gonna get a
$10.99 k. I'm not in the I'm nota landlord. We're just sharing
expenses.
John Tripolsky (18:23):
I can only imagine the, like, the volume of
transactions that you talkedabout a little bit earlier. I
mean, I don't personally, Idon't use Venmo a whole lot. I
just, you know, call my wife andsay, hey. There's $50 at the
counter. You Venmo somebody.
But it's like, if you're incollege, if you're at a college
campus, hitting a hitting two to500 transactions is I mean, you
(18:43):
probably do that in a semester.Like
Chris Picciurro, CPA (18:46):
Right. And now it's just a matter of the
now it's on if you have onetransaction for $2,501, you're
gonna get the $10.99 k. Yeah.The splitting of expenses.
Because think about somethingreal quick.
Let's say, John, you, let'schange the facts on. Let's say
you bought a con let's say youbought a condo because, like,
(19:06):
your your real life situation.You and you put it on e Airbnb,
and you and you rented it out onVenmo, or you rented it out as a
short term rental. I mean, ifyou went through Airbnb, don't
know if that that venue Venmoyou. But the point is now you're
in a for for profit activity.
So the tax reporting iscompletely different than
splitting an expense. So youhave to dive into what that
activity is. But $10.99 k's,hey. You you could definitely
(19:31):
get one just due to personalreimbursements. It could be
gifts between family andfriends.
I mean, you could have abenevolent grandparent that
gifts you $3,000 easily. That'snot taxable. Or transfer between
personal accounts. What ifyou're transferring money from
your personal account into Venmoor vice versa? So now what do
you do, John?
What do you do if you receive a$10.99 k and you are not in
(20:00):
business?
John Tripolsky (20:01):
And really, Chris, with this too, it's, you
know, it's great that they kindof separate. Right? Taxable and
nontaxable. If they didn't dothe nontaxable side, I think we
have a whole other situation onour hands. But really, at the
end of the day, even ifeverything you do is nontaxable
throughout a year, right, itdoes add that layer of
complexity to filing yourreturns accurately.
(20:24):
Right? So I can see this being athing and now playing devil's
advocate on the taxpayer side.Right? Like, what a great tool,
though, that we have these.Because, basically, now the
individual can in theory, you'rebeing able to accept credit
card, debit cards, even eventhough, you know, someone's
loading their account and thenit's transferring to you.
But, like, it really has pushedus from a little bit more of a
(20:48):
cashless, you know, economy,really, in a sense. Right. So
it's the technology, I think, isincredible. I think it's great
how now it interacts withthings. I love it, of course,
because my local hardware store,you know, now even lets me do
Apple Pay, so I'm excited aboutthat.
And I get points back on it too,so I'm a happy camper. But Well,
Chris Picciurro, CPA (21:07):
you gotta think about that. Remember,
everyone has to pay tax, shouldyou know, has to report their
income. So if you're in thebusiness if you're in business,
if you get paid on Venmo or not,you should be reporting all your
income on your schedule. See ifyou're self employed or or let's
say you're selling personalassets that are for capital gain
or loss, you still might bereporting in on schedule d. What
(21:29):
happens if you get a ten ninetynine k and it's simply let's
think about their roommateexample.
Right? Or the cookie example orthe popcorn example. The first
thing you should do is youshould contact the TPSO and let
them know, hey. I shouldn't havegotten a ten ninety nine k. I'm
not in the business of sellingCub Scout popcorn or, you know,
(21:50):
pickleball league funds.
That being said, the chancesthat the TPSO are gonna, in a
timely fashion, change theirreporting might be small. So if
you do get one, my best advicewould be put it on your tax
return as other income, and thenback it out for the same amount
and simply write the explanationwith your tax return, $10.99 k
(22:14):
$10.99 k received in air funds,simply a expense sharing between
friends. Don't just not put iton your tax return.
John Tripolsky (22:25):
Absolutely. Absolutely. And I think this is
really good for us to, you know,dive into and cover again
because there's so many peoplethat use this. Right? And
another bonus to this just beingin existence, right, not the
reporting side of it, but justthe technology, right, is now
you can't have somebody really,like, couch surfing at your
place anymore saying, like, oh,I forgot my wallet.
Be like, I've seen you on yourphone, man. Like, I see you. So,
(22:48):
you know, shoot me my $25.You've owed me for something.
Chris Picciurro, CPA: Absolutely. (22:51):
undefined
John Tripolsky (22:52):
And it is great. And, yeah, Chris, I'm I'm glad
that we kinda, you know,wrangled you into this one. I
know you had a have many othertopics, as I mentioned, that are
way more exciting to you. But asyou alluded to at the beginning
as well, so many of ourcommunity members use this. I
mean, down to really youngerchill I wouldn't say children.
I don't know what act I mean, isit like a certain age to
(23:14):
actually have a Venmo account?I'm sure. You know, all the way
up to, you know, people who havemore than enough money to pay
for stuff or could use to carrya wad of cash in a rubber band.
You know? Now they're usingsomething like this.
So it's great that we went overthis. And, yeah, those you know,
I guess we'll kinda sit tightand ride the pine and see where
things go if if that changes.Right? The little patch you
mentioned.
Chris Picciurro, CPA (23:35):
Exactly. Or if it goes if it goes down to
$600 threshold as expected,we're gonna have a lot more
reporting, and that's whythere's no such thing as an easy
tax return.
John Tripolsky (23:45):
Oh. On that note, we should make one of
these days like hug yourfavorite CPA day or something
like that. But take care of yourtax professional because they
take care of you. But awesome.Hopefully, you guys enjoyed this
topic.
Again, we always welcome anyideas you guys have. Any
questions you have, shoot themover. That's where we get this
content from as Chris hadmentioned as well. And as
always, we look forward to ournext topic on the Teaching Tax
(24:09):
Flow podcast next week.Different date, same day of the
week, Completely differenttopic.
Have a great week, everybody.
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information contained in thememorandum.
Hey, everyone, and welcome back to the teaching
tax full podcast episode 136today. We are looking at Venmo.
Yes. You heard it right. Venmo,one of the most popular payment
peer to peer business tobusiness transaction DIY
platforms out there.
But what we're looking at todayare some twenty twenty five
rules that the IRS has in placeand how they look at this
(00:26):
platform and there are similarones out there. But before we do
that, as always, let's take abrief moment and thank our
episode sponsor.
Ad Read (00:37):
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are new to estate planning orsimply need to review your
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John Tripolsky (01:01):
Hey, everybody, and welcome back to the podcast.
Now today, we're gonna talkabout a topic I know Chris
Piquiro is extremely, extremelyexcited about. I'm just kidding.
He's not too excited about it.Who is really excited about
talking about a topic?
Right? If you're getting anyrevenue, say, who wants to be
(01:24):
taxed on that? Right? So we'regonna talk about a lot of these
stuff or should say a little bitabout it because there's a lot
of stuff going out there aboutit, but we just wanna give you
really the the nuts and bolts,if we will, around platforms
such as Venmo. You have PayPal.
Cash App is one of them, andthere's a whole ton of these
things out there. So what we'regonna get into, again, not too
deep into the weeds, but whatyou can expect a little bit
(01:47):
about some changes from the IRSas it relates to these
platforms. So as I mentioned, Iknow it's his favorite topic to
discuss. Chris Pacquiro, welcomeback, buddy. How's it going
today?
Chris Picciurro, CPA (01:56):
It is going very well. How are you
doing today?
John Tripolsky (02:00):
Doing good, man. Doing good. I I did not you know
what? I should say, I will Venmoyou a couple bucks for doing
this topic with me. I know.
I know. And I know you're notexcited about it because there's
a million other things in yourworld that excite you way more
than this.
Chris Picciurro, CPA (02:16):
That's true. But you know what? We have
to think about the teaching taxflow community and what's best
for them, and this is somethingthat's gonna affect a lot of
them. As you know, first of all,thank you so much for watching.
Thank you for listening.
We truly appreciate you. Withoutyou, we wouldn't be doing this.
We want you if you're notalready, we want you in the
(02:36):
defeating taxes private Facebookgroup. Go to defeatingtaxes.com.
Remember, you can always postanonymously.
The other thing, which I'm gonnacall it this is our fuel tank,
John, our YouTube channel.Teaching Tax Full YouTube
channel, that's our fuel tank.So please pump some gas in our
fuel tank. Guess what? It'sgonna be free gas.
It's not like what you're payingat the pump right now. All you
(02:58):
have to do is check it out, giveus a like, and, and a follow
because that helps us bring youthe content. And this makes me
maybe tackle some topics thataren't my personal favorite, but
I know that the community needsit. So, so thank you, first of
all. We are loving all theinteraction.
And, you know? And then and and,again, if you have any questions
(03:21):
about this, go to 2025.tax. Justdrop an inquiry in. We're happy
to help. Now this topic, we callit the Venmo tax.
Social media calls it the Venmotax. But but what this is is
it's something that has comeabout over the last few years
with IRS. It's a topic that weactually taught, in our tax
(03:43):
season updates. I'm very honoredto be one of the National
Association of Tax Professionalsinstructors. I got a chance to
speak to about three to 400 taxprofessionals last year.
I think we're gonna probably hitmore than that this year. And
this was a topic. So peer topeer, tax professionals are also
learning about this topic andeducating ourselves. When I
(04:04):
taught this topic, I like tocall it the Taylor Swift tax.
Now, Taylor is to the best of myknowledge and, because I have a
fifteen year old daughter nowthat gives me updates.
She is now focusing, or she isnow not on tour anymore, so I
don't know that I can call itthe Taylor Swift tax. Maybe
we'll find something else. Maybewe'll call it the Savannah
(04:26):
Banana or the, some othertouring organization's tax. And
you might say, well, why isthat? Well, let me paint a
picture for you, John.
Let's well, I know you're aSwifty. You've been outed many
times as a Swifty. It goes alongwith some of your other
questionable music choices,which will remain unnamed. But
(04:47):
let's say John says, you knowwhat? My daughter's daycare.
I'm getting all the dadstogether, and we're gonna go to
the Taylor Swift concert. Andit's a very expensive concert to
go to, but so he buys 10tickets, and for $300 a ticket.
John Tripolsky (05:03):
That's a steal.
Chris Picciurro, CPA (05:04):
It is a steal, actually. And and then
he's he just says tells theother dads, don't worry about
it. Venmo me $300 for yourticket. No big deal. John's not
in the business of taking groupsto the t sizzle concert or doing
special events.
However, there's an unintendedconsequence. John will now get a
(05:26):
$10.99 at the end of the year,most likely, because of his
Venmo activities. And there's alot of innocent things happening
out there that that arereporting nightmares for
taxpayers. I'll give you acouple more examples that I have
personally witnessed in ourprivate CPA firm. One, the Cub
Scout popcorn or Girl Scoutcookie, leader.
(05:50):
Right? You go to Kroger. You goto my you go to your grocery
local grocery store. You buyeither Girl Scout cookies or Cub
Scout popcorn. You Venmosomeone, and it's typically one
of the parents of theparticipants.
And they bring in thousands andthousands of dollars of Venmo.
They're not in the business ofpeddling popcorn or cookies, and
(06:10):
they transfer that money over tothe organization to purchase
said, product. They haven't madeno money. They're not in the
business of doing it. However,they could very well be getting
tax forms in the mail.
That can happen all the time.The final one I'll talk about is
for those of you that playfantasy football, or let's say
(06:31):
you are in a pickleball league.Our our pickleball league, we is
a is a couple hundred dollars ayear total to be in, very
modest, but we've got about 90guys in the league. That's a
significant amount of Venmotransactions occurring for no
real profit for the personorganizing it. So that is those
are the unintended consequencesof what we call the Venmo tax.
(06:53):
So what are the rules? Well, weknow that these digital payments
have become more popular andpopular, and the IRS is seeing
that there could be income thatis going unreported. Now we call
the Venmo tax. John, youremember when we were kids of
course, I'm a couple years olderthan you, and you happen to,
enjoy reminding people that I'ma decade older than you,
although you just look odometer.But so we would say, hey.
(07:19):
Can you pass me a Kleenex? Canyou throw me a Coke? Right? We
know Kleenex is really a facialtissue. So we know Coke is a
soft drink.
John, we're from Michigan, wecall it pop. People down here in
the South call it soda.
John Tripolsky (07:34):
Mhmm.
Chris Picciurro, CPA (07:35):
I don't understand that, but that's a
whole another episode.
John Tripolsky (07:37):
I love I love throwing people a curveball.
When I lived in when I lived inSouth Carolina, it's like, oh,
is it a soda pop then? They'relike, well, no. It's just soda.
Well, to me, it's just pop, soI'm I'll compromise.
But
Chris Picciurro, CPA (07:48):
Exactly. And a lot of people say, hey.
I'll have a Coke. They mighthave a Pepsi. They might have an
RC Cola.
It's the point is when we saythe Venmo tax, it applies to
Venmo, PayPal, Cash App, andseveral other what what are
called TPSOs, third partysettlement organizations.
Alright? And these are theorganizations that collect money
from one party, transfer it tothe other party. And now here in
(08:13):
2025, a new threshold for, tenninety nine k reporting does
take effect. A ten ninety nine kis the tax form that is required
if you go over the threshold forfor third party network
transactions.
So we'll put a link into theshow notes to a ten ninety nine
(08:35):
k, and, technically, it's apayment card and third party
network transactions tax form.So there are a lot of people
that are doing some what we callinnocent activities. You know,
there's Giant, when yourdaughter's getting older, you're
gonna realize as you and yourwife I know you're very involved
with the community, but andyou're gonna continue to realize
that no good deed goesunpunished. That is a % true. So
(08:55):
as you volunteer for things and,hey.
You know, I'll be classroom dador the classroom mom and Venmo
me money for the teacher gift,and all of sudden, I've got a
tax form. So the but the the$10.99 k is a tax form you can
you will receive if you go overwhat we call the threshold. And
that threshold did change in for2025. It actually got reduced.
(09:22):
Throw what the what thresholdmeans is that if you go over
that dollar amount in these TPSOtransactions for the year, you
will receive a ten ninety ninek.
John Tripolsky (09:35):
And I'm really glad, Chris, that you did go
over to it before we discusswhat those thresholds are
actually. So I'm glad that youbrought up that Kleenex example.
Right? Because I I feel likethere's these platforms are so
user friendly. Right?
It's like, I wouldn't saycareless or anything done well,
let's be honest, people areusing them maliciously.
(09:56):
Whatever. It is what it is. Itcan't stop everybody. But it's
been it's almost like part ofour daily lives.
Right? Where nobody I was gonnasay nobody, but I I can't tell
you the last time I've actuallyeven given any form of currency
tangible to somebody, you know,somebody splitting a lunch bill
or or something like that.Right? So these platforms are
out there, and people are usingthem more and more and more. And
(10:18):
I would probably bet I'm justgonna randomly come up with a
number that probably less than,like, 1% of people that even use
them know that this is even athing.
Chris Picciurro, CPA: Absolutely. I mean, John, I'm (10:29):
undefined
just I've been thinking aboutjust in the last month. We my
wife and I used Venmo to tip awe we a valet driver when we
went out to to, dinner onenight. You know, we're we're not
John, I'd rather walk a fewblocks, but we were in Downtown
Nashville, you know, and, kindadressed up. So we had, you know,
(10:50):
tipping of tipping a someone ata hotel that's helping you with
your bags, typically Venmo.
I've got another example. Wethis this restaurant will not be
named. If you wanna know,though, and you're in Franklin,
Tennessee, if you wanna know theMexican restaurant, best
margaritas by far, JohnTrapolski Trapolski has graced
this place with this presence.The one drawback, which could be
(11:12):
a positive, is bad Wi Fi. It'sprobably not
John Tripolsky (11:17):
They are missing well, me and you are are, like,
notorious for finding ways todrag our laptops and our
business conversations to themost non business friendly
establishments. But, yeah, thatone I was disappointed in, man.
Nothing's better than, like,salsa and Wi Fi. Right?
Chris Picciurro, CPA (11:33):
Like But
John Tripolsky (11:33):
that's supposed to go.
Chris Picciurro, CPA (11:34):
Know. It was salsa. You you get a little
salsa on your computer. And,John, we've been to this
establishment many times. Infact, one time, it's quite quite
a it was it was the anniversaryof the establishment.
They had really good deals onmargaritas. They had a bunch of
outdoor seating, and it was itwas a very interesting
experience. We'll say that. Butwe're gonna leave that has
nothing to do with $10.99 k, buthere's why it does in in all
(11:56):
seriousness. Because my wife andI like to go to this set
establishment, we received giftcards from people to this
establishment.
So when we went to use our giftcards, no problem, we cashed
out, we paid for our meal, andwe wanted to put a tip on it.
Well, they said, just with ourcomputer system, you can't tip
(12:17):
using your gift card, which iskinda weird. Usually, can. Well,
we don't carry cash, and thispoor server just helped us. So
we we asked him, and he's like,oh, yeah.
Do my wife says, do you haveVenmo? Yeah. Can we at least
Venmo you a tip? Sure. Noproblem.
But think about that. We had totip this server in Venmo. Who
knows how many times that thatkind of stuff happens? So Right.
John Tripolsky (12:38):
It's just like live music venues. I feel like
everybody that hits a stage,that's, like, their their way to
do it. That's like a a requestthe old request buckets. You
know, where you drop a piece ofpaper, write a folder in there,
throw it in. Now it's like,don't tell us your song unless
you Venmo us.
Correct.
Chris Picciurro, CPA (12:55):
So as early as 2023, the threshold. So
when you're as you listen tothis, think about threshold is
when I have it doesn't meanthat's when you have to report
something. We're gonna talkabout that in a couple minutes.
It means when you're going toreceive the ten ninety nine k
form. That threshold for 2023was $20,000 of transactions and
200 of minimum transactions.
(13:17):
Okay? So that kinda, eliminateda lot of people from getting the
ten ninety nine k. In 2024, itwas 5,000 of transaction of of
report, transfers ortransactions, and there was no
minimum transaction. So it'ssolely based on the amount of
transactions for 2025. Only$2,500.
(13:41):
So you could easily see how thatcan happen, especially man, I
mean, think, John, think about,like, going out to how many
times have you guys gone out todinner with, like, four or five
couples? Someone, you know, putsit on their car, and then
everyone Venmo's the money. Itcan $2,500 can add up pretty
pretty quickly over the year,and then you have a ten ninety
nine k. And here's the kicker.In 2026, that threshold dips
(14:03):
down to $600.
Now we'll see if the patch comesthrough. It has happened quite
often because you gotta imaginethese third party settlement
organizations really don't wannaissue all these ten ninety nine
k's and track everything. Butthat those are the rules for
when a ten ninety nine k isissued. Now I'm gonna pause for
(14:24):
a quick second. The issuance ofa ten ninety nine k doesn't
dictate if if something'staxable or not taxable.
It really is plays a role in howwe handle our tax return if
we're issued a ten ninety nine kand we're not in the business of
of doing something that weshould be reporting that as
taxable income.
John Tripolsky (14:43):
Mhmm. And and really, Chris, I mean, I can see
this, you know, to to kind ofplay devil's advocate a little
bit for the IRS. Right? Soanybody that's listening to this
as a tax player, please do not,you know, knock me over on the
street for saying this. But,really, I wouldn't say it's I'm
not gonna say it's a good ideaall the way around.
But for them, it's a verybeneficial tool and a move, I
(15:06):
think. I mean and I don't knowhow I feel about the number,
obviously, or the number oftransactions. But think about
it. Right? Like, you have garagesales doing a couple thousand
dollars.
You have people selling thingson marketplace. You have all
this stuff. You you have somecompanies I know for a fact
paying their contractors withVenmo or PayPal or something. So
(15:28):
it's smart on their part againto kinda really look at this as
like, okay. This is reallyflying under the radar.
We know it. How are we gonna,you know, collect on that,
basically?
Chris Picciurro, CPA (15:39):
Right. I mean, think about garage sales.
When we were a kid, we wouldhave three, four families coming
together and have one monstergarage sale. And and, of course,
there was no Venmo then. But nowyou would probably have one
Venmo account, and people areshifting money back and forth.
So, again, ten ninety nine kreporting is autonomous from
reporting it as taxable income.But if you get a ten ninety nine
(16:01):
k, you have to deal with it, oryou will probably get a letter
from the IRS, and they are notgoing to give you the benefit of
the doubt. They're going to tellyou, say that it's taxable
income. So remember, you have tore you report as a US tax
resident. You report your grossincome.
You report rather your incomefrom all sources. So when we
(16:26):
talk about these ten ninety ninek's, which of these transactions
are actually taxable? So whichones are reported as taxable
income on your tax return? I'mgonna give you four most common
examples. One is gonna be yourfreelancers.
We you know, we love ourfreelancers, our gig workers
here in teaching tax flow. So itcould be a tutor. It could be,
(16:47):
anyone doing some side hustle,rather, you know, some so in in
segue of gig economy and sidehustle. So you got freelancers
are kinda separate than, youknow, side hustles and gig
economy, Uber, DoorDash, thosekind of things. A lot of times,
those are people are paid,tipped, and in Venmo.
If you're selling goods for aprofit. So let's you know, John,
there's a rumor that we might,you know, we might be writing a
(17:10):
teaching tax flow book. If wesell it on online and get Venmo,
then we that's a good sold forprofit. That's taxable income.
If you're selling things onFacebook Marketplace for profit,
that is taxable income.
If you sell your kid's old bike,that's not that's that's not a
(17:30):
taxable income. It's just it'skinda like a garage sale
situation. But you might sellyou know, you've gotta look at
the situation, and are youselling things for income and
professional services? So thoseare all things that are typical,
transactions that occur on a tenninety nine k that are taxable.
Now there could be somenontaxable reporting, and that's
(17:55):
where it gets sticky.
You get a ten ninety nine k, andyou're not in the business of of
selling things, but you justhappen to receive one due to a a
variety of reasons. The topthree ones are gonna be personal
reimbursements. Like I said,splitting. Here's a great one,
John, splitting rent. Right?
Let's say you and I rented acondo and and you Venmoed me a
(18:15):
grand a month, and I paid the$2,000 of rent. I'm gonna get a
$10.99 k. I'm not in the I'm nota landlord. We're just sharing
expenses.
John Tripolsky (18:23):
I can only imagine the, like, the volume of
transactions that you talkedabout a little bit earlier. I
mean, I don't personally, Idon't use Venmo a whole lot. I
just, you know, call my wife andsay, hey. There's $50 at the
counter. You Venmo somebody.
But it's like, if you're incollege, if you're at a college
campus, hitting a hitting two to500 transactions is I mean, you
(18:43):
probably do that in a semester.Like
Chris Picciurro, CPA (18:46):
Right. And now it's just a matter of the
now it's on if you have onetransaction for $2,501, you're
gonna get the $10.99 k. Yeah.The splitting of expenses.
Because think about somethingreal quick.
Let's say, John, you, let'schange the facts on. Let's say
you bought a con let's say youbought a condo because, like,
(19:06):
your your real life situation.You and you put it on e Airbnb,
and you and you rented it out onVenmo, or you rented it out as a
short term rental. I mean, ifyou went through Airbnb, don't
know if that that venue Venmoyou. But the point is now you're
in a for for profit activity.
So the tax reporting iscompletely different than
splitting an expense. So youhave to dive into what that
activity is. But $10.99 k's,hey. You you could definitely
(19:31):
get one just due to personalreimbursements. It could be
gifts between family andfriends.
I mean, you could have abenevolent grandparent that
gifts you $3,000 easily. That'snot taxable. Or transfer between
personal accounts. What ifyou're transferring money from
your personal account into Venmoor vice versa? So now what do
you do, John?
What do you do if you receive a$10.99 k and you are not in
(20:00):
business?
John Tripolsky (20:01):
And really, Chris, with this too, it's, you
know, it's great that they kindof separate. Right? Taxable and
nontaxable. If they didn't dothe nontaxable side, I think we
have a whole other situation onour hands. But really, at the
end of the day, even ifeverything you do is nontaxable
throughout a year, right, itdoes add that layer of
complexity to filing yourreturns accurately.
(20:24):
Right? So I can see this being athing and now playing devil's
advocate on the taxpayer side.Right? Like, what a great tool,
though, that we have these.Because, basically, now the
individual can in theory, you'rebeing able to accept credit
card, debit cards, even eventhough, you know, someone's
loading their account and thenit's transferring to you.
But, like, it really has pushedus from a little bit more of a
(20:48):
cashless, you know, economy,really, in a sense. Right. So
it's the technology, I think, isincredible. I think it's great
how now it interacts withthings. I love it, of course,
because my local hardware store,you know, now even lets me do
Apple Pay, so I'm excited aboutthat.
And I get points back on it too,so I'm a happy camper. But Well,
Chris Picciurro, CPA (21:07):
you gotta think about that. Remember,
everyone has to pay tax, shouldyou know, has to report their
income. So if you're in thebusiness if you're in business,
if you get paid on Venmo or not,you should be reporting all your
income on your schedule. See ifyou're self employed or or let's
say you're selling personalassets that are for capital gain
or loss, you still might bereporting in on schedule d. What
(21:29):
happens if you get a ten ninetynine k and it's simply let's
think about their roommateexample.
Right? Or the cookie example orthe popcorn example. The first
thing you should do is youshould contact the TPSO and let
them know, hey. I shouldn't havegotten a ten ninety nine k. I'm
not in the business of sellingCub Scout popcorn or, you know,
(21:50):
pickleball league funds.
That being said, the chancesthat the TPSO are gonna, in a
timely fashion, change theirreporting might be small. So if
you do get one, my best advicewould be put it on your tax
return as other income, and thenback it out for the same amount
and simply write the explanationwith your tax return, $10.99 k
(22:14):
$10.99 k received in air funds,simply a expense sharing between
friends. Don't just not put iton your tax return.
John Tripolsky (22:25):
Absolutely. Absolutely. And I think this is
really good for us to, you know,dive into and cover again
because there's so many peoplethat use this. Right? And
another bonus to this just beingin existence, right, not the
reporting side of it, but justthe technology, right, is now
you can't have somebody really,like, couch surfing at your
place anymore saying, like, oh,I forgot my wallet.
Be like, I've seen you on yourphone, man. Like, I see you. So,
(22:48):
you know, shoot me my $25.You've owed me for something.
Chris Picciurro, CPA: Absolutely. (22:51):
undefined
John Tripolsky (22:52):
And it is great. And, yeah, Chris, I'm I'm glad
that we kinda, you know,wrangled you into this one. I
know you had a have many othertopics, as I mentioned, that are
way more exciting to you. But asyou alluded to at the beginning
as well, so many of ourcommunity members use this. I
mean, down to really youngerchill I wouldn't say children.
I don't know what act I mean, isit like a certain age to
(23:14):
actually have a Venmo account?I'm sure. You know, all the way
up to, you know, people who havemore than enough money to pay
for stuff or could use to carrya wad of cash in a rubber band.
You know? Now they're usingsomething like this.
So it's great that we went overthis. And, yeah, those you know,
I guess we'll kinda sit tightand ride the pine and see where
things go if if that changes.Right? The little patch you
mentioned.
Chris Picciurro, CPA (23:35):
Exactly. Or if it goes if it goes down to
$600 threshold as expected,we're gonna have a lot more
reporting, and that's whythere's no such thing as an easy
tax return.
John Tripolsky (23:45):
Oh. On that note, we should make one of
these days like hug yourfavorite CPA day or something
like that. But take care of yourtax professional because they
take care of you. But awesome.Hopefully, you guys enjoyed this
topic.
Again, we always welcome anyideas you guys have. Any
questions you have, shoot themover. That's where we get this
content from as Chris hadmentioned as well. And as
always, we look forward to ournext topic on the Teaching Tax
(24:09):
Flow podcast next week.Different date, same day of the
week, Completely differenttopic.
Have a great week, everybody.
Disclaimer (24:23):
The content provided is for educational purposes
only. We encourage you to seekpersonalized investment advice
from your financialprofessional. For all tax and
legal advice, please consultyour CPA or attorney. Investment
advisory services are offeredthrough Cabin Advisors, a
registered investment advisor.Securities are offered through
Cabin Securities, a registeredbroker dealer. The content of
this podcast does not constitutean offer of securities.
(24:45):
Offerings can only be madethrough an offering memorandum,
and you should carefully examinethe risk factors and other
information contained in thememorandum.
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