Taxpayers with a Cash App account may be in for a surprise this year when a new tax form arrives — specifically the Form 1099-K. It covers business payments on the payment app, which may need to be reported on your federal and state tax return.
If you’ve used Cash App or another mobile app, such as Paypal or Venmo, in the last tax year, some of your transactions could qualify as taxable income. This is especially true if you have a business account or used one of the apps to receive payments related to self-employment or freelancing.
Let’s take a closer look at the changing income tax rules being phased in this tax season that might leave you on the hook for Cash App taxes.
The answer: It depends.
If you use Cash App to send money to friends and family — reimbursing split costs, for example — those types of transactions do not have to be reported.
The reporting requirements apply to money you make selling goods or services that is paid to you via the app.
If you have a business account with Cash App and your transactions meet the reporting threshold for the calendar year (for the 2024 tax year it’s $5,000), you should receive a 1099-K form from Cash App for tax reporting purposes. Cash App is also required to send this tax information to the IRS.
Keep in mind both small business owners, self-employed contractors, and freelancers alike are required to report payments for goods and services directly to the IRS to determine liability for federal and state tax. And while some transactions in your business account may actually be personal payments and exempt from IRS rules on income reporting, they’ll still show up on your tax documents from Cash App.
Here are a few scenarios to help you determine which types of payments fall under IRS rules for income reporting and which ones you can exempt. When in doubt about which transactions fall under the tax law, it’s always best to consult a tax professional or certified public accountant (CPA).
Examples of business transactions:
Receiving payment for cleaning, food prep, or other professional services
Being paid for handmade jewelry or crafts
Flipping furniture and selling it for a profit
Earning money for mowing lawns or pet care
Getting money for providing transportation or delivering meals
Examples of personal transactions:
Receiving money for a dinner check you split with friends or family
Selling your used couch for less than you paid for it
Receiving money from your roommate to cover the groceries
Your spouse sending money for half the month’s utilities
Getting money to cover the cost of gas or a hotel for a group trip
As you can see from the examples, most transactions you make through your personal account on Cash App that involve family or friends would be exempt from income reporting unless you were acting in a professional capacity. Furthermore, Cash App’s terms of service prohibit using a personal account to accept business payments.
Read more: Venmo taxes: IRS rules for payment app transactions
Passed as part of the American Rescue Plan in 2021, the minimum thresholds for reporting payment app transactions have been gradually phasing in. After an initial delay, the IRS required Cash App and other payment apps to issue 1099-Ks to report any business income of $20,000 or more for the 2023 tax year.
For the 2024 tax year — the current one — that threshold drops to $5,000 in business payments received. For 2025 taxes, the threshold will fall to $600 in business income and stay there unless additional tax laws are passed or updated.
Note that for state returns, some states have instituted their own reporting thresholds that may be lower or different from the federal rules. Before you start tax preparation, consult your state’s website for more information.
If you had a Cash App business account in 2024 and your total business transactions were $5,000 or more, you should have received a Form 1099-K from Cash App to include with your federal and state tax return. The form may be sent to you in the mail or via email, or it could be available to download on Cash App’s website.
One tricky part of these reporting obligations is that some taxpayers may have accidentally used business accounts to receive money for the sale of personal items. The IRS website says that while this isn’t optimal, you can handle these transactions one of two ways. Either report the payment on your federal tax return at the top of Schedule 1 (Form 1040) or report the loss on Form 8949, Sales and Other Dispositions of Capital Assets (you’ll find the specific line on Schedule D, Capital Gains and Losses).
Read more: How to file your 2024 return for free
Even if you didn’t receive a 1099-K, you are still required to report all your taxable income received through Cash App and any other payment platforms on your tax return. This would include any business transactions made with credit cards, debit cards, or via other payment platforms that you received in your business or personal account as payment for goods or services you provided.
Failure to fully report your income to the IRS carries various penalties, including an accuracy-related penalty for significant underpayment of taxes and a failure to file penalty for those who might try to skip out on paying taxes altogether. You’ll also accrue interest on the penalties and the amount of taxes due, so it’s best to stay on top of your tax liability and report income accurately up front.
Did you receive a 1099-K form from Cash App in error or with incorrect information? The IRS says to contact Cash App to get it corrected. In the meantime, you can still submit it by making adjustments to your federal and state tax filing to account for personal items sold at a loss or gain.
Cash App doesn’t send a 1099-K to personal account holders because they generally aren’t liable for taxes on personal payments between family and friends. Cash App may review and flag transactions in your personal account that appear to be business-related. They’ll usually recommend you open a business account using a different email and phone number from your personal account.
In fact, if it appears you are continuing to use your personal account to conduct business dealings either as a small business, freelancer, or self-employed contractor, Cash App may lock your personal account entirely for violating its terms of service.
Read more: How do self-employment taxes work? A step-by-step guide
The IRS payment app reporting rules that apply to Cash App are also in effect for other mobile apps that provide peer-to-peer payment services such as Paypal and Venmo. All of these payment platforms are subject to the same reporting thresholds and are required to issue a Form 1099-K for any potentially taxable income.
One exception to this is Zelle, which no longer offers money transfers through a stand-alone payment platform and can only be accessed through your bank or credit union’s app or website.
Yes, some states have started rolling out their own payment app reporting thresholds requiring 1099-Ks for state tax filings independent of IRS rules. For the District of Columbia (DC), Maryland, Massachusetts, Vermont, and Virginia, the 2024 reporting threshold for payment apps like Cash App is $600 or more in business payments within the previous tax year.
For Illinois, the 2024 threshold for payment apps to report business income is $1,000 and at least three or more separate transactions. Missouri sets its reporting threshold at $1,200 for business-related app payments.
The reporting of bitcoin and other cryptocurrency transactions on Cash App is separate from reporting business income. Cash App will provide both you and the IRS with a Form 1099-B that details your bitcoin transactions.
However, Cash App doesn’t include any peer-to-peer transactions involving bitcoin in the 1099-B form, so it’s your responsibility to make sure your tax reporting is accurate. If you have questions about what needs to be reported to the IRS, it’s best to seek tax advice from a professional.
