Whether big or small, most of us are not comfortable sharing our monetary transactions with anyone else let alone a giant company like the IRS. Therefore, money transfer app users have growing concern about their privacy. I have come across multiple customers wondering does Zelle report to IRS and here are the answers!
Does Zelle Report To The IRS How Much Money You Receive?
It would be a sigh of relief for all the current users to find out that Zelle does not report to the IRS.
The Internal Revenue Service has updated relevant institutions that transactions above $600 must be shared with IRS. This is to ensure that small businesses also pay their fair share of taxes.
However, FirstBank’s authority which oversees Zelle’s operation has clarified that Zelle does not report the transaction to the IRS. This holds true even for the transfers that exceed $600.
Which Money Transfer Apps Report To The IRS and Which Do Not?
The IRS law requiring that certain payment networks report their transactions through the use of forms 1099K does not apply to Zelle. However, certain other money transfer apps are accountable under it.
This type of information can get confusing so I will make it simple for you. IRS would not tax any transfers that take place between friends and family members.
Therefore, the new law also does not apply to other apps like Venmo or Cash App. You also do not need to worry about taxes when sending money from Zelle to Cash App.
There are, however, certain exceptions to this rule. As I have mentioned before, none of the apps report to Internal Revenue Service if you are sending funds or receiving money from other smaller accounts. But, if the transactions are done with larger businesses they would be shared with IRS.
Let’s say that you use Venmo or Zelle to receive payments for freelancing jobs. Or you buy something online from a large-scale retailer such as Amazon or eBay. In this case, your transactions would probably be shared with IRS.
Nonetheless, tax payments do not come as a surprise anymore. If you have due charges, they will send in 1099 form. This explains what has been reported to the Internal Revenue Service and why.
Does Zelle Business Account Report to The IRS?
According to the recent information collected from the official website, Zelle does not report any type of transaction to the IRS. This includes even the ones you are carrying out via business account. However, it does highlight that if there is any taxable transaction from your account, it is your personal duty to report it to the Internal Revenue Service.
If there is any confusion about which is taxable amount and which is not, I recommend you get in touch with tax professional as soon as possible.
Before You Go!
If you use money transfer apps like Zelle or Venmo for daily, minimal transactions then you have got nothing to worry about. Since the new IRS law was put forward to screen small businesses not paying taxes, it does not apply to personal transfers.
Those customers who have any doubt regarding this policy and think they might be charges later on should count their app’s help center to gather more information.
