“Our Tax Software Picks: Cash App Offers the Best Option for Confident Filers in 2024. Cash App Taxes: The IRS is implementing a new tax reporting rule that will impact freelancers and side hustlers. Third-party payment apps like PayPal, Venmo, and Cash App will now be required to issue tax form 1099-K to individuals who earned over $5,000 in income through these apps in 2024. Even if you don’t receive a 1099 form, freelancers and self-employed individuals should already be paying taxes on their total earnings. This reporting change aims to track transactions that often go unreported. This change is part of Taxes 2025, CNET’s coverage of tax software and tips to file your return and track your refund.
The threshold for receiving a 1099-K was previously $20,000 and 200 transactions, but it has been lowered to $5,000 for 2024. You should receive a 1099-K if you earned $5,000 or more through third-party payment apps and need to report this income on your tax return in 2025. A 1099-K reports income received through third-party payment platforms for non-permanent jobs like side hustles or freelance work where taxes are not withheld.
Under the new reporting requirements, payment apps will be required to report earnings over $600 to the IRS. For 2024 taxes, the threshold has been raised to $5,000 to reduce inaccuracies and allow more time for implementation. Popular payment apps like PayPal, Venmo, Cash App, Fivver, and Upwork will be required to report payments made to freelancers and business owners. Zelle users, however, are exempt from receiving a 1099-K.
Personal transactions involving gifts, reimbursements, or splitting bills with friends are not taxable and will not be reported on a 1099-K. If you sell items on platforms like Facebook Marketplace or Poshmark at a loss, you won’t owe taxes on the sale. Keep good records of your transactions to ensure accurate reporting.
To prepare for this reporting change, be ready to provide your tax information to payment apps and keep track of your income. Consult a tax professional for assistance if needed.”