If you’ve ever thought, “Eh, it’s just Cash App, the IRS doesn’t care,” buckle up. Let’s talk about why your peer-to-peer payments aren’t actually hiding in the shadows.

Spoiler Alert: The IRS Can See Your Side Hustle Glow-Up

Cash App. PayPal. Venmo. Stripe. Zelle. It doesn’t matter which digital envelope you use, if money hits it, the IRS cares. They care deeply. Like your grandma tracking whether you liked her Facebook post.

The myth that “peer-to-peer = private” hasn’t been true for years. But with recent tax law changes, it’s really not true anymore. Think of it less like a secret stash and more like a window the IRS keeps casually peeking through.

Meet Form 1099-K: The Snitch of the Payments World

If you’re getting paid for business, services, freelance work, products, or that Etsy shop where you sell crocheted versions of your dog… the platform processing your payments has one job:

Tell the IRS.

For 2025 tax filings (and beyond), payment processors must send a 1099-K when your business-related transactions hit IRS thresholds. Even if you don’t get a form the income is still taxable.

Not sure what a 1099-K is? Check out our blog post on the topic: The Difference Between 1099-NEC vs. 1099-K: What Every Freelancer, Side-Hustler, and Creator Needs to Know

“But Some of My Payments Are Personal!”

Good. The IRS doesn’t want your roommate paying you back for tacos to count as income.

Platforms like Venmo and Cash App rolled out business vs. personal tags because people were mixing the two and ain’t nobody got time for that.

To keep things clean:

• Use separate accounts for business and personal.
• Label transactions correctly.

If a platform mislabels something and sends a 1099-K for personal transactions?

You can fix it. Annoying? Yes. The end of the world? No.

Here’s Where Most People Accidentally Get Themselves in Trouble

• Mixing business and personal in one app
• Thinking no 1099-K = tax-free
• Using Cash App as a “secret” business account
• Not tracking expenses (and leaving thousands of dollars in legal deductions on the table)

Need help tracking your expenses to get the proper deductions? Sign for TaxHakr and let us help.

So What Should You Do Instead?

1. Separate Your Worlds

Business account → business transactions.
Personal account → personal transactions.

Keep it clean. Keep it simple. 

2. Track Your Business Income Like… a Business

It doesn’t have to be fancy.

 It just has to be accurate.

Apps like TaxHakr (hi, that’s us 👋) make this painless.

What deductions might you be missing out on? Find out here. 

3. Know What You’re Working With Before You File

When tax season hits, make sure:

• 1099-K’s match what you actually earned
• Non-business payments aren’t included
• You report all business income (even if a form never arrived)

You Don’t Need to Fear the IRS, you just need to prepare for it

Cash App, PayPal, and Venmo aren’t your financial invisibility cloaks. They’re just tools. Useful, convenient, and sometimes confusing tools.

But when you understand how the IRS views those transactions, you stay in control. You stay compliant. And most importantly, you keep more of your hard-earned money instead of accidentally handing it over.

Want to Make This Whole Process Way Less Annoying?

TaxHakr tracks your income, sorts your deductions, and keeps you ahead of the IRS without the stress and the spreadsheets.