Taxpayers who have a Cash App account might be surprised to receive a new tax form, Form 1099-K, this year. This form covers business payments made on the platform, which may be required to be reported on federal and state tax returns.

If you used Cash App or similar mobile payment apps like Paypal or Venmo in the past tax year, some of your transactions could count as taxable income. This is particularly applicable if you have a business account or received payments related to self-employment or freelance work through these apps.

Changes in income tax regulations coming into effect this tax season could result in potential tax obligations related to Cash App transactions.

The requirement to report Cash App transactions on your income tax return depends on the nature of the transactions. Payments made to friends and family, such as splitting costs, generally do not need to be reported. Reporting obligations apply to income from selling goods or services received through the app.

For Cash App business account holders whose transactions meet or exceed the reporting threshold for the year (which is $5,000 for the 2024 tax year), they should anticipate receiving a 1099-K form from Cash App for tax reporting purposes. Cash App is obligated to share this tax information with the IRS.

Both small business owners and self-employed individuals must report payments for goods and services directly to the IRS to evaluate federal and state tax liabilities. While some transactions in a business account could be personal and exempt from IRS income reporting regulations, they will still be reflected on tax documents from Cash App.

To discern which payments need to be reported as income and which are exempt, it is advisable to consult a tax professional or Certified Public Accountant (CPA) when unsure about the application of tax laws to specific transactions.