The New Venmo Friends List: What You Need to Know

As the 2024 tax year approaches, the IRS is making significant changes to its reporting requirements for payment apps like Venmo. Starting in 2025, users will be required to receive Form 1099-K for any payments of goods and services over $5,000, regardless of the number of transactions. This new law aims to simplify tax administration and prevent unnecessary confusion.

Currently, the IRS requires payment apps to issue Form 1099-K when certain payment transactions meet specific criteria: more than 200 transactions within a year and total payments exceeding $20,000. However, with the phased-in approach, the reporting threshold will be lowered from $20,000 to $5,000 during a transitional stage.

The change is part of the 2021 law that tightened rules for payment apps, requiring them to send users Form 1099-K for transactions totaling over $600 for payment of goods and services. Initially, the new requirements were set to take effect in 2023, but the IRS announced a delay until the 2024 tax filing season.

This reprieve means taxpayers using Cash App, Venmo, and similar payment apps have more time to prepare for the changes. Currently, users are required to report payments if they exceed tens of thousands of dollars or involve numerous transactions within a year.

It's essential for Venmo friends list members to understand these changes and adjust their financial planning accordingly. As the reporting requirements become more stringent, it's crucial to keep accurate records of transactions and payments to ensure smooth tax filing in the future.