From Yahoo Finance: 2025-04-11 11:20:00

PayPal, Venmo, and Cash app users may need to report received money on their tax returns due to new IRS requirements. Business transactions via these apps are considered taxable income, while personal transfers are not. PayPal will provide a Form 1099-K for business transactions meeting the reporting threshold.

The IRS is lowering reporting thresholds for third-party payment apps like PayPal. In 2024, businesses receiving $5,000 will get a 1099-K. Zelle is exempt as it’s a bank transfer service. Consult a tax professional for accurate advice on reporting PayPal income on your tax return, especially with varying state thresholds.

Payments between family and friends on PayPal aren’t taxable, but business payments for goods and services are. Some states have lower reporting thresholds than the IRS, such as Maryland, Massachusetts, Vermont, Virginia, and Illinois. Stay updated on IRS reporting requirements and consult with a tax professional for guidance.



Read more at Yahoo Finance: How do PayPal taxes work? Here’s what you need to know about reporting to the IRS.