You don't pay tax on Venmo money from friends and family, such as splitting a bill or a birthday gift. You do owe tax on income, such as money for things you sold at a profit or work you did, and the IRS says that's true whether or not Venmo sends you a 1099-K.
The confusion comes from mixing up two separate questions: will Venmo report me, and do I owe tax? Venmo's reporting rules only decide who gets a form. Your tax bill depends on what the money was for. Here's each one in turn.
What's taxable and what isn't
| Venmo payment | Taxable? |
|---|---|
| Friend pays you back for dinner or rent share | No, the IRS says repayments aren't income |
| Birthday or holiday money | No, the IRS treats it as a gift |
| Payment for a service you provided | Yes, it's income |
| Selling your own old sofa for less than you paid | Usually no profit to tax, but keep records |
| Selling things you made or bought to resell | Yes, the profit is income |
When Venmo sends a 1099-K
For the 2025 tax year, Venmo sends a Form 1099-K only when your goods and services payments go over 20,000 dollars and you also have more than 200 of them. You need both. Venmo's own examples make it clear: 18,000 dollars from 300 sales gets no form, and 22,000 dollars from 180 sales gets no form either.
Some states set a lower bar. PayPal, which runs Venmo's tax reporting, lists Vermont, Massachusetts, Virginia and Maryland at 600 dollars regardless of how many payments, and Illinois at over 1,000 dollars with four or more payments. So depending where you live, a form can arrive at much lower amounts.
The goods and services tag
When someone pays you on Venmo, they choose whether to tag it as goods and services. That tag gives the buyer protection and makes the payment reportable. Payments to a business profile are tagged automatically. Venmo can't reclassify a payment after it's processed, but a payment being reportable doesn't make it taxable: if a friend wrongly tags your share of a holiday as a purchase, talk to a tax professional about how to treat it.
The 24% trap
Here's the catch I'd want every seller to know. If you reach the reporting threshold without giving Venmo your tax ID, Venmo has to hold your goods and services payments and then send 24% of them to the IRS each month as backup withholding. That money can't be returned to you by Venmo. You can claim it on your tax return, but you've lost the use of it in the meantime.
The fix is quick: add your tax ID in the app when Venmo prompts you, or under Settings, then Identity Verification.
Other Venmo tax forms
- Form 1099-MISC for certain rewards
- Form 1099-DA for cryptocurrency sales or exchanges
- Form 1099-K for goods and services above the threshold
What to do if you earn through Venmo
- Ask buyers and clients to pay you as goods and services, or set up a business profile, so the record is clean.
- Give Venmo your tax ID before you get near the threshold.
- Keep a simple list of what each payment was for, and your costs.
- Report your income on your return, even with no 1099-K.
- Download your Venmo statements at year end to back up your figures.
A simple example
Say you design logos on the side and three clients pay you through Venmo across the year, tagged as goods and services, for a total well under 20,000 dollars. You probably won't get a 1099-K, unless you live in one of the lower-threshold states. You still report that income as self-employment income, minus your costs such as software. Now say a friend sends you money for concert tickets you bought for both of you. That's a repayment, not income, even if the amount is large.
The two cases look the same in the app. What separates them is what the money was for, which is why a one-line note on each payment is the cheapest tax habit you can build.
Selling your own stuff on Venmo
Clearing out the garage is a common reason people worry. The IRS says you must report goods you sell, including personal items such as clothing or furniture sold at a gain. Sell your old sofa for less than you paid and there's usually no gain to tax. Keep a rough note of what you paid for valuable items, because that's what proves there was no profit if a form ever shows the sale.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
My verdict
Venmo isn't a tax dodge and it isn't a tax trap. Friends money is fine. Earnings are taxable like any other earnings. The form only changes how visible your income is to the IRS. If Venmo is becoming a real side income, read my freelancer tips and this guide to business tax savings, and compare apps in PayPal vs Venmo.
Frequently asked questions
Is money from friends on Venmo taxable?
No. The IRS says gifts and repayments for personal expenses, like splitting a meal or rent, aren't taxable income.
When will Venmo send me a 1099-K?
For 2025, when your goods and services payments exceed 20,000 dollars and more than 200 transactions. Some states, such as Maryland and Virginia, use a lower 600 dollar threshold.
Do I pay tax on Venmo sales under 20,000 dollars?
If it's income, yes. The IRS says you must report income whether or not you get a Form 1099-K.
Do I pay tax on selling my old things on Venmo?
Only on a gain. The IRS says you must report goods you sell at a gain; selling a used item for less than you paid usually leaves no profit to tax, so keep a note of what you paid.
What is Venmo backup withholding?
If you pass the reporting threshold without giving Venmo your tax ID, it must send 24% of your goods and services payments to the IRS each month until your information is verified.
Can Venmo change a payment from goods and services to personal?
No. Venmo says it can't reclassify a payment after it's processed, though a reportable payment isn't automatically taxable.
