#1 TikTok Ads Spy Tool

A Better Way to Make TikTok Ads Dropshipping & TikTok For Business

  • Find TikTok winning products & TikTok dropshipping ads.
  • Analyze TikTok advertisers
  • Get the Latest TikTok Shop Data.
Try It Free

Venmo 1099 Taxes Explained Clearly - How will Venmo 1099 Income be Taxed?

Published on: December 6 2022 by FeedbackWrench

Venmo 1099 Taxes Explained Clearly - How will Venmo 1099 Income be Taxed?

Venmo 1099 Taxes Explained Clearly - How will Venmo 1099 Income be Taxed?

startTime durationTime text
00:00:00 00:00:06 all right so in 2022 or 2021 you might
00:00:03 00:00:07 have gotten a 1099k from venmo a lot of
00:00:06 00:00:08 people are going to start seeing this
00:00:07 00:00:10 moving forward now if you got a side
00:00:08 00:00:12 hustle going and you've been using venmo
00:00:10 00:00:14 you just got to know what's going to
00:00:12 00:00:16 happen here so long story short just so
00:00:14 00:00:19 you know it says in 2021 and tax year
00:00:16 00:00:24 they're going to issue a 1099 k if
00:00:19 00:00:26 your business profile has done over 20k
00:00:24 00:00:29 in gross pay
00:00:26 00:00:31 or 200 payments for goods and services
00:00:29 00:00:33 so basically if you've passed the
00:00:31 00:00:34 threshold for your state the states vary
00:00:33 00:00:36 a little bit so let's just look at that
00:00:34 00:00:38 real quick for most of them it's twenty
00:00:36 00:00:40 thousand dollars in gross payments but
00:00:38 00:00:42 in massachusetts maryland vermont and
00:00:40 00:00:43 virginia the threshold six hundred we're
00:00:42 00:00:44 gonna tok about how much you're going
00:00:43 00:00:46 to get taxed are you going to get taxed
00:00:44 00:00:49 on your vendor payments what's going to
00:00:46 00:00:50 happen to you and just got to help you
00:00:49 00:00:52 understand exactly what's going on here
00:00:50 00:00:55 so i'm going to pull something up
00:00:52 00:00:57 to help you quick fathom what's going on
00:00:55 00:00:59 a lot of people are wondering do i owe
00:00:57 00:01:02 taxes on this what's going to happen
00:00:59 00:01:04 um how do i handle this what is
00:01:02 00:01:06 happening with my venmo payments and
00:01:04 00:01:08 just a quick reminder that if you're at
00:01:06 00:01:11 you know anything over 20k
00:01:08 00:01:13 is gonna have uh taxes that's
00:01:11 00:01:14 dollars a week 52 weeks in the year if
00:01:13 00:01:16 you've done over
00:01:14 00:01:18 385 dollars
00:01:16 00:01:19 a time
00:01:18 00:01:20 um you're gonna have some issues so
00:01:19 00:01:21 let's just tok about the taxation let's
00:01:20 00:01:23 tok about what's gonna happen so first
00:01:21 00:01:25 of all what you need to know is if you
00:01:23 00:01:28 get sent over twenty thousand dollars
00:01:25 00:01:30 are you going to be taxed are you taxed
00:01:28 00:01:32 on these venmo 1099 k's well the bottom
00:01:30 00:01:34 line is is this is basically showing
00:01:32 00:01:36 that you're getting business income and
00:01:34 00:01:39 you don't owe
00:01:36 00:01:41 taxes on your gross so the answer is no
00:01:39 00:01:43 you're not going to owe taxes on the
00:01:41 00:01:45 full amount of your 1099k that you get
00:01:43 00:01:47 from venmo or from any of these cash
00:01:45 00:01:49 apps or anything like that what's going
00:01:47 00:01:50 to happen is now you've got to account
00:01:49 00:01:52 for it a little bit you're going to have
00:01:50 00:01:54 to show um you know where did you get
00:01:52 00:01:55 this money and you're gonna have to show
00:01:54 00:01:57 what happened so here's a classic
00:01:55 00:01:59 example let's just imagine that you were
00:01:57 00:02:03 buying furniture fixing it up and
00:01:59 00:02:06 selling it maybe you brought in 26 000
00:02:03 00:02:08 in sales when it comes to um actual
00:02:06 00:02:10 sales so your venmo might show twenty
00:02:08 00:02:11 six thousand dollars but you're like
00:02:10 00:02:14 hold on a minute i didn't make twenty
00:02:11 00:02:16 six thousand dollars no freaking way did
00:02:14 00:02:17 i make that much i had to go buy the
00:02:16 00:02:19 furniture
00:02:17 00:02:21 right so what we're gonna do is we're
00:02:19 00:02:23 gonna tok about that you go from let's
00:02:21 00:02:27 just say you showed 26 thousand dollars
00:02:23 00:02:29 in gross revenue on your 1089k but you
00:02:27 00:02:30 spend 14 000
00:02:29 00:02:32 on this furniture right that's usually
00:02:30 00:02:35 how most businesses are gonna be right
00:02:32 00:02:37 you had a cost of goods or you had like
00:02:35 00:02:39 write-offs and those are deductions what
00:02:37 00:02:41 did it take to actually get that um but
00:02:39 00:02:42 let's look at that just a little bit so
00:02:41 00:02:45 then in this case you'd show a net
00:02:42 00:02:46 profit of twelve thousand dollars now if
00:02:45 00:02:48 you've got the net profit of twelve
00:02:46 00:02:50 thousand dollars here's what you need to
00:02:48 00:02:51 know uh welcome to being a business
00:02:50 00:02:53 owner
00:02:51 00:02:55 my first quick little tip let's just get
00:02:53 00:02:57 to where this goes right number one if
00:02:55 00:02:59 you're gonna be doing this open up a
00:02:57 00:03:00 business bank account number two
00:02:59 00:03:02 probably you can't do that until you
00:03:00 00:03:04 register with your state right now
00:03:02 00:03:06 remember if you go to your state and say
00:03:04 00:03:07 hey i'm a sole proprietorship i i'm
00:03:06 00:03:09 going to be ta
00:03:07 00:03:10 i'm a sole proprietorship because that's
00:03:09 00:03:11 what you are you're going to have a
00:03:10 00:03:13 schedule c you're going to be you're
00:03:11 00:03:14 going to be a sole proprietorship and
00:03:13 00:03:16 i'm going to show you how that's taxed
00:03:14 00:03:18 here just so that you're aware of it
00:03:16 00:03:20 but the the most simple thing that you
00:03:18 00:03:21 should be doing to help yourself
00:03:20 00:03:24 show
00:03:21 00:03:25 that you didn't just make 26 000 we have
00:03:24 00:03:26 to show
00:03:25 00:03:28 all of this is you're going to have to
00:03:26 00:03:30 do some bookkeeping well the foundations
00:03:28 00:03:31 of good bookkeeping is get a business
00:03:30 00:03:33 bank account
00:03:31 00:03:36 have all the revenue go in
00:03:33 00:03:39 and then use that business bank account
00:03:36 00:03:40 to buy things and to actually run your
00:03:39 00:03:42 business now
00:03:40 00:03:43 you're going to have to do some it's
00:03:42 00:03:45 probably good to get a bookkeeper or
00:03:43 00:03:48 start learning some bookkeeping you can
00:03:45 00:03:51 use zero x e r o you can use quickbooks
00:03:48 00:03:53 online there's a bunch there but
00:03:51 00:03:56 you need to start showing that you uh
00:03:53 00:03:59 you didn't make 26 000 what your 1099k
00:03:56 00:04:02 says from venmo you have a growth so
00:03:59 00:04:04 let's just say in this example you made
00:04:02 00:04:05 you netted twelve thousand dollars now
00:04:04 00:04:07 you're going to want to think of other
00:04:05 00:04:09 business expenses that went into this
00:04:07 00:04:12 your mileage that went into making that
00:04:09 00:04:14 profit the phones the internet
00:04:12 00:04:17 even your home office
00:04:14 00:04:18 are all things that will help
00:04:17 00:04:20 reduce the taxes that you're going to
00:04:18 00:04:21 owe because they're qualified business
00:04:20 00:04:22 deductions so you're going to want to
00:04:21 00:04:23 read some blogs and take a look at
00:04:22 00:04:25 things
00:04:23 00:04:27 on how what what are the best business
00:04:25 00:04:29 deductions it's essentially all the
00:04:27 00:04:30 stuff that actually goes into it you
00:04:29 00:04:32 can't do like designer clothes but you
00:04:30 00:04:34 can do clothes that are required for
00:04:32 00:04:36 work um you're not going to be able to
00:04:34 00:04:38 write off your actual vehicle you're
00:04:36 00:04:40 going to do mileage on your vehicle it's
00:04:38 00:04:42 all of the stuff that actually goes into
00:04:40 00:04:44 creating the profits for the business
00:04:42 00:04:45 essentially gets written off
00:04:44 00:04:47 so not everything but let's just say in
00:04:45 00:04:49 this example you made twelve thousand
00:04:47 00:04:51 dollars just to be easy the first taxes
00:04:49 00:04:53 you're gonna owe are gonna be called
00:04:51 00:04:56 your social
00:04:53 00:04:57 security and medicare taxes this is
00:04:56 00:04:59 called your se taxes we call it
00:04:57 00:05:00 self-employment taxes and what that is
00:04:59 00:05:02 is it's
00:05:00 00:05:05 back when you worked for one corporation
00:05:02 00:05:07 and it was your employer and yourself
00:05:05 00:05:10 when you went together
00:05:07 00:05:12 up to the social security limit of 158
00:05:10 00:05:14 000 this year 150 some odd thousand
00:05:12 00:05:16 up to the social security limit
00:05:14 00:05:18 everything you earned on a w to every
00:05:16 00:05:21 wage that you earned
00:05:18 00:05:22 you paid 6.2 percent to the social
00:05:21 00:05:23 security
00:05:22 00:05:26 and
00:05:23 00:05:29 1.9 whatever it's 2.8 total on both
00:05:26 00:05:32 sides you paid a social security tax so
00:05:29 00:05:34 you always saw that oasdi or fica and
00:05:32 00:05:36 then you'd have medicare md right and
00:05:34 00:05:38 what that is is that's your medicare and
00:05:36 00:05:40 your social security when you were an
00:05:38 00:05:42 employee you paid half of it and your
00:05:40 00:05:44 employer you didn't know this was paying
00:05:42 00:05:46 the other half so there was a 15.3
00:05:44 00:05:49 percent friction
00:05:46 00:05:52 between your employer and you
00:05:49 00:05:54 welcome to taxes now you get to eat all
00:05:52 00:05:54 that
00:05:54 00:05:57 fun isn't it
00:05:56 00:05:59 everybody would vote different if they
00:05:57 00:06:01 all saw the gross and wrote a check to
00:05:59 00:06:03 create their net so
00:06:01 00:06:05 right off the bat you have to pay this
00:06:03 00:06:07 self-employment tax
00:06:05 00:06:11 only on the net okay
00:06:07 00:06:14 so we made 12 grand we we got 26 000 in
00:06:11 00:06:16 gross revenue we we had 14 000 in
00:06:14 00:06:17 write-offs and all the stuff that it
00:06:16 00:06:20 took to and i'm using cost of goods sold
00:06:17 00:06:21 it's not the right word but basically
00:06:20 00:06:24 it's it costs fourteen thousand dollars
00:06:21 00:06:25 to do business anti made twelve thousand
00:06:24 00:06:26 right
00:06:25 00:06:27 the first thing you're gonna do is
00:06:26 00:06:29 you're gonna pay fifteen point three
00:06:27 00:06:34 percent on this twelve thousand dollars
00:06:29 00:06:34 which is eighteen hundred bucks
00:06:35 00:06:38 then what you're going to do is you're
00:06:36 00:06:40 going to pay your income taxes and
00:06:38 00:06:42 depending on where you're at remember we
00:06:40 00:06:44 pay a progressive income tax
00:06:42 00:06:46 so now
00:06:44 00:06:47 what you need to remember is that all of
00:06:46 00:06:50 us
00:06:47 00:06:52 for the most part it phases out but if
00:06:50 00:06:56 unless you're making higher amounts of
00:06:52 00:06:58 income you have a standard deduction
00:06:56 00:07:01 or you can itemize it but long story
00:06:58 00:07:03 short we have like the first zero to 12
00:07:01 00:07:05 thousand eight hundred or whatever of
00:07:03 00:07:08 your money is taxed at zero percent and
00:07:05 00:07:10 then it's ten percent then it's fifteen
00:07:08 00:07:12 and basically every dollar over certain
00:07:10 00:07:15 amounts you progressively pay higher
00:07:12 00:07:18 percentages of taxes
00:07:15 00:07:19 so if you're making money in a w-2 over
00:07:18 00:07:21 here it's kind of like this gets added
00:07:19 00:07:22 on top of that so you're just gonna have
00:07:21 00:07:25 to remember that
00:07:22 00:07:26 to a degree you just owe your income tax
00:07:25 00:07:28 right and you have state if you live in
00:07:26 00:07:30 minnesota but if you don't pay state
00:07:28 00:07:32 income tax whatever so let's just say
00:07:30 00:07:34 you had an effective rate which is
00:07:32 00:07:37 basically you might pay zero percent
00:07:34 00:07:38 then 10 then 15 and then 20 and 25
00:07:37 00:07:40 whatever
00:07:38 00:07:44 um you're going to pay income tax on
00:07:40 00:07:46 that so in this example just using a 20
00:07:44 00:07:48 which that might be high
00:07:46 00:07:50 most kind of average americans you're
00:07:48 00:07:52 probably not going to be an effective 20
00:07:50 00:07:54 rate on all this um if you're not
00:07:52 00:07:57 working but if you are working it's
00:07:54 00:07:58 going to be higher so in this case total
00:07:57 00:08:01 taxes is not that much it's about four
00:07:58 00:08:03 thousand bucks i didn't i copied and
00:08:01 00:08:05 pasted and didn't write that so
00:08:03 00:08:08 you're gonna write a check for four
00:08:05 00:08:10 thousand dollars on this 12 grand um
00:08:08 00:08:11 it could be that you're going to write a
00:08:10 00:08:14 check for
00:08:11 00:08:16 more like you know twenty five hundred
00:08:14 00:08:18 dollars this is this is pretty high
00:08:16 00:08:19 right 20 is probably not what it is but
00:08:18 00:08:21 long story short guys
00:08:19 00:08:23 your business now and your side gigs
00:08:21 00:08:26 whether you were driving for uber or if
00:08:23 00:08:28 you were buying and selling stuff
00:08:26 00:08:30 there's two laws that have come across
00:08:28 00:08:31 one all these cash apps are reporting in
00:08:30 00:08:33 two you gotta remember our federal
00:08:31 00:08:35 government is starting to require banks
00:08:33 00:08:37 to report on even smaller
00:08:35 00:08:39 transactions they're
00:08:37 00:08:41 running out of money they're spending it
00:08:39 00:08:42 all and they're looking for it so if you
00:08:41 00:08:44 have venmo and you're getting these 1099
00:08:42 00:08:46 this is just a real basic primer on how
00:08:44 00:08:48 you're about to get taxed good luck god
00:08:46 00:08:50 bless keep that side hustle up don't let
00:08:48 00:08:52 this could discourage you dog gonna go
00:08:50 00:08:54 out and add value into people's lives
00:08:52 00:08:56 fix up that furniture
00:08:54 00:09:00 be an artist go do digital marketing go
00:08:56 00:09:03 become a youtuber do whatever go create
00:09:00 00:09:04 and bring what god has put inside of you
00:09:03 00:09:06 to the world
00:09:04 00:09:08 add value and do it in such a manner
00:09:06 00:09:11 that it attracts people's dollars and
00:09:08 00:09:13 that you can go around and create
00:09:11 00:09:15 do that do not shy away from this just
00:09:13 00:09:17 because your government
00:09:15 00:09:18 makes it hard to get into business and
00:09:17 00:09:20 is trying to shake you down for more
00:09:18 00:09:23 money don't let that bring
00:09:20 00:09:24 discouragement push through
00:09:23 00:09:26 and then there's some things you can do
00:09:24 00:09:27 for tax reduction there's some stuff
00:09:26 00:09:31 that you can do over time we'll tok
00:09:27 00:09:31 about that later good luck god bless