The Tax Man is Watching: Understanding the New 1099-K Rules for Venmo

Here's what’s changing, why it matters, and how to stay ahead with the right questions and tools.

What Changed and Why It Matters to Small Business Tax Reporting 

Beginning in 2026, the IRS will require payment apps like Venmo, PayPal, and Cash App to report business payments totaling $600 or more in a year. This is a major change from the old rule, which only applied if you had 200+ transactions and over $20,000 in income.

This report comes in the form of Form 1099-K, which the payment platform sends to both you and the IRS typically by January 31st each year. It includes the total amount of payments you received, even if the amount was for just one transaction.

If you mix personal and business payments in the same account, the risk of mistakes goes up. The IRS may see income where there wasn’t any, or you might miss income you need to report. That’s why separating and tracking income is more important than ever.

Questions SMBs Should Be Asking About Rules for Payment Apps

If you’re unsure what to do next, the best place to start is by asking the right questions. These can help you understand what to expect, how to prepare, and what to do if something looks off.

• Will I get a Form 1099-K this year?
  (Did you receive $600 or more for goods or services using Venmo, PayPal, or similar apps?)
• How do I accurately track my income through payment apps?
  (Are you logging every business-related payment and keeping it separate from personal ones?)
• What if the information on my 1099-K is wrong?
  (Do you have records to back up your actual income if you need to challenge the form?)
• Should I separate personal and business payments?
  (Could using different accounts reduce confusion and protect you during tax season?)

What You Can Do to Stay Ahead

Once you’ve asked the right questions, it’s time to turn those insights into action.

• Separate your business and personal payments: This is the most critical step. Use different accounts to make tax time easier and drastically reduce reporting mistakes.
• Use a simple tracking tool or spreadsheet: Regularly log incoming payments so nothing catches you off guard.
• Compare your records to your 1099-K: Spot errors early and avoid surprises when you file taxes.
• Utilize expert tools and resources: Features like Rocket Copilot and Ask a Legal Pro can help you double-check what applies to your business.

A few small changes today can save you big headaches later when it comes to small business tax reporting. Ask smart questions, track your income clearly, and use the right tools to stay in control.