# Cash App Taxes: Everything You Need to Know About Reporting Cash App Income

In today’s digital economy, peer-to-peer payment apps like Cash App have become essential tools for sending and receiving money quickly. Whether you’re splitting a dinner bill, selling items online, freelancing, or even receiving payments for side gigs, Cash App makes transactions easy and convenient.

But with ease comes responsibility—especially when it comes to taxes. Many people wonder: Do I need to report Cash App transactions on my taxes? How does Cash App income get taxed? What records should I keep?

In this comprehensive guide, we’ll cover everything you need to know about Cash App and taxes—from the IRS’s perspective to practical tips to stay compliant and avoid surprises at tax time.

### What is Cash App?

Cash App is a mobile payment service owned by Block, Inc. (formerly Square, Inc.) that allows users to send and receive money instantly. Users can link their bank accounts, debit cards, or credit cards to the app, and can also buy and sell Bitcoin or invest in stocks directly through Cash App.

Cash App offers a mix of personal and business payment features, making it popular for a wide variety of transactions:

Peer-to-peer payments (splitting bills, gifts, paying friends/family)

Small business sales and payments

Gig economy and freelance income

Buying/selling Bitcoin and stock investments

### Does Cash App Report to the IRS?

Yes, Cash App reports certain transactions to the IRS, but only above a specific threshold.

The IRS requires payment platforms like Cash App, Venmo, PayPal, and others to report transactions when gross payments exceed $600 in a calendar year. This reporting is done using IRS Form 1099-K.

#### Important points:

Before 2022, the threshold was $20,000 in gross payments AND 200 transactions in a year.

Starting with tax year 2022, the IRS lowered the reporting threshold to $600 in total payments, regardless of the number of transactions.

Cash App will send you a Form 1099-K if your qualifying payments meet or exceed this $600 mark.

The form also gets reported directly to the IRS.

Note: This applies to payments received for goods or services, not for personal transfers like gifts or reimbursements.

### What Is IRS Form 1099-K?

Form 1099-K is the IRS form that third-party payment processors like Cash App use to report income from payments processed through their platform.

If you receive more than $600 in payments for goods or services through Cash App in a year, Cash App is required to issue Form 1099-K to you and to the IRS.

##### The form shows:

Gross payment amount you received

Number of transactions processed

Keep in mind: Form 1099-K reports gross income before deducting fees or expenses.

## When Do You Have to Pay Taxes on Cash App?

##### Here’s the key rule:

Any income you receive through Cash App that is for goods or services is taxable and must be reported on your tax return.

##### This includes:

Payments from clients or customers if you’re self-employed or a freelancer.

Sales proceeds if you sell products (online or offline).

Tips or gratuities received.

Gig work payments (rideshare, food delivery, etc.).

Any other business income.

### What about personal payments?

Money received as a gift, loan repayment, or personal reimbursement is generally not taxable and does not need to be reported.

For example, if a friend pays you back for concert tickets you bought, it’s not income.

But if a friend pays you $100 “just because,” it could be considered a gift (which has different tax rules).

How to Report Cash App Income on Your Taxes

If you receive taxable payments on Cash App, here’s how to handle reporting:

##### 1. Track All Income Received via Cash App

Maintain accurate records of all payments received related to your business or side hustle, including:

Date of payment

Amount

Purpose or service provided

Even if you don’t receive a 1099-K, you are still responsible for reporting all income earned.

##### 2. Report Income on the Correct Tax Form

If you are self-employed or a freelancer, report your Cash App income on Schedule C (Form 1040).

If you operate a formal business entity (LLC, corporation), income flows through to the appropriate business tax return.

For casual sales (like selling personal items), you usually don’t pay tax unless you are selling items for profit regularly.

##### 3. Deduct Expenses

On Schedule C, you can deduct ordinary and necessary business expenses, such as:

Cost of goods sold (COGS)

Supplies

Marketing

Fees paid to Cash App

Phone and internet expenses

Home office deduction (if applicable)

This reduces your taxable income and lowers your tax bill.

##### 4. Pay Self-Employment Taxes

If you earn money as a freelancer or independent contractor through Cash App, you owe self-employment taxes in addition to income tax. This covers your contributions to Social Security and Medicare.

The self-employment tax rate is 15.3% on net earnings (12.4% for Social Security + 2.9% for Medicare).

##### 5. Pay Estimated Taxes Quarterly

If you expect to owe $1,000 or more in taxes, including from Cash App income, you should make quarterly estimated tax payments to avoid penalties.

Cash App Fees and Taxes

Cash App charges fees for certain transactions:

Instant transfers to your bank account

Bitcoin purchases and sales

Business transactions

You can deduct these fees as a business expense if they relate to income-generating activities.

Recordkeeping Best Practices for Cash App Users

Good records make tax filing easier and protect you in case of an audit.

Here’s what you should keep:

Bank statements showing deposits

Screenshots or PDFs of Cash App transactions

Receipts and invoices for goods or services sold

Records of fees paid to Cash App

Notes explaining the nature of payments (business vs. personal)

Consider using bookkeeping software or apps designed for freelancers and small businesses to track your income and expenses seamlessly.

### Common Questions About Cash App and Taxes
##### 1. What if I don’t get a 1099-K from Cash App?

You are still responsible for reporting all income. The IRS expects you to report your total income accurately even if you don’t receive a tax form.

##### 2. What about Bitcoin transactions on Cash App?

Cryptocurrency transactions are taxable events. If you buy, sell, or use Bitcoin through Cash App, you must report gains or losses on your tax return.

##### 3. Are personal payments taxable?

No, personal payments like gifts or reimbursements are not taxable.

##### 4. Can I write off personal expenses paid through Cash App?

No, only business-related expenses are deductible.

##### 5. Does Cash App charge tax on transactions?

No, Cash App does not collect sales tax. You’re responsible for reporting and paying any applicable taxes.

Risks of Not Reporting Cash App Income

Failing to report Cash App income can lead to:

IRS audits

Penalties and interest charges

Back taxes owed

Legal trouble in extreme cases

The IRS is increasing scrutiny on digital payment platforms. Proper reporting is crucial.

### Tips to Stay Compliant with Cash App Taxes

Separate personal and business accounts: Use a dedicated Cash App account or separate funds for business.

Keep thorough records: Document every transaction with details.

Report all income: Don’t rely solely on 1099-K forms.

Track expenses: Save receipts and document fees for deductions.

Pay quarterly estimated taxes: Avoid underpayment penalties.

Consult a tax professional: Especially if you have complex transactions or cryptocurrency activity.

## Summary

Cash App is a fantastic tool for convenient payments but comes with tax responsibilities:

Income received for goods and services via Cash App is taxable.

The IRS requires Cash App to report transactions exceeding $600 with Form 1099-K.

All income must be reported, even if you don’t receive a tax form.

Keep good records and deduct eligible expenses.

Pay self-employment and income taxes as required.

Stay proactive and consult professionals if needed.

By understanding your tax obligations with Cash App, you can avoid headaches and ensure your finances stay in order while enjoying the benefits of this popular payment app.