Do you receive payments for your freelance business through peer-to-peer (P2P) payment apps such as Venmo, PayPal, Facebook, or other mobile platforms? If so, it’s important to know how income from these apps will impact your freelance taxes. In fact, because of the potential for these transactions to “fall through the cracks” of your regular freelance income reporting, it’s especially important to keep detailed records of them—because the IRS has already identified these platforms as a key area in which it is working to improve its tracking capabilities.
In April, the IRS released an internal audit report on the capabilities it has to investigate fraudulent activity and non-reported income on these platforms. The recommendations from the report include increasing the agency’s ability to track activity and subsequently scrutinize the tax obligations of individuals utilizing these platforms.