30% of Tax Filers Are Stressed About Payment Platform Reporting. Here's How to Navigate It

When you're self-employed, managing your taxes can be a bit more complicated than it is for people who get paid a salary. That's because you're required to pay estimated taxes on your earnings during the year, as opposed to having taxes withheld from your pay.

You're also required to keep accurate records of your freelance earnings, since you'll need to report your income in full to the IRS, and you may not receive tax forms summarizing every dollar you earn.

In fact, if you got paid a lot in 2023 through a third-party platform, like Venmo, then you may be stressed about reporting that income this spring. In a recent Adobe survey, 30% of tax filers said they were stressed about reporting income they received from payment platforms.

But while the rules of reporting income in that category might seem complex, they're actually pretty simple.

You have to report all of your income -- period

Currently, third-party platforms like Venmo are only required to issue 1099 forms to users who earned more than $20,000 in 2023 across more than 200 individual transactions. The IRS had originally sought to lower that threshold to $600 for 2023, regardless of transactions, but held off on implementing that new rule.

So here's how that might play out for you. Let's say Venmo was your payment platform of choice in 2023, and you received a total of $14,000 in payments across 204 transactions. In that case, you won't get a 1099 form from Venmo for 2023 because you didn't meet the $20,000 threshold.

Or, let's say you received six very large Venmo transactions totaling $24,000 for freelance work you did in 2023. Here, you meet the income threshold but not the transaction requirement, so once again, you won't be in receipt of a 1099 form for 2023.

But let's say you earned a total of $26,000 across 210 transactions. In that case, you should have received a 1099 form for 2023 already.

But regardless of how much you were paid by a third-party platform in 2023, and regardless of how many transactions your payments entailed, you have to report all of your income to the IRS on your tax return. It doesn't matter whether you have a 1099 form in your hands or not. If you earned the money, you must report and pay taxes on it. Period.

You may want to ask for help

Reporting and managing self-employment income can be tricky. It's a good idea to enlist the help of a tax professional to not only file your tax return, but to manage your income and tax obligations during the year.

A tax professional, for example, can help you calculate your estimated quarterly IRS payments so you're not coming up short but you're also not parting with too much money that could otherwise sit in your bank account.

Either way, don't let yourself get caught up in complicated payment platform reporting rules. Go through your records to see how much income you earned in 2023 and report it all -- regardless of where it came from.