Yes, rent payments you collect through Venmo are taxable. The payment app changes nothing about the underlying tax rule: rent is income the moment it lands in your account, whether the tenant sent it by check, wire, cash, or a tap in Venmo. What Venmo does change is visibility. Payment platforms report qualifying activity to the IRS on Form 1099-K, so unreported rent is easier to find than it used to be. For 2026 and later, that reporting kicks in only when you cross $20,000 in goods-and-services payments and more than 200 transactions in the year, after Congress restored the original threshold in 2025.
Rent Is Taxable Regardless of How It Arrives
Federal tax regulations require landlords to include all rental receipts in gross income for the year received.1eCFR. 26 CFR Section 1.61-8 – Rents and Royalties The label on the transaction doesn’t matter. Neither does the platform. If someone paid you for the right to live in your property, it’s rent, and it belongs on your return.
Most residential landlords report that income on Schedule E, which covers passive rental activities like traditional long-term leases.2Internal Revenue Service. About Schedule E (Form 1040), Supplemental Income and Loss Schedule E is the right form when you’re renting out a house or apartment without providing hotel-style services.
When Venmo Actually Sends the IRS a 1099-K
Venmo is a third-party settlement organization and must report certain payment activity to the IRS on Form 1099-K.3Internal Revenue Service. Understanding Your Form 1099-K The threshold is more than $20,000 in goods-and-services payments across more than 200 transactions in a calendar year. Both conditions have to be met.
The number has bounced around. The American Rescue Plan Act of 2021 tried to drop it to $600, and the IRS delayed and phased in the lower figure for several years. That’s over. The One, Big, Beautiful Bill, signed in 2025, retroactively wiped out the lower threshold and permanently restored the original $20,000 and 200-transaction requirement.4Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill
Practically, this means a landlord collecting $1,500 or $2,000 a month from a single tenant will not receive a 1099-K from Venmo. That doesn’t make the income non-taxable. It only means Venmo isn’t automatically flagging it for the IRS. You still have to report every dollar of rent on your return.
Goods and Services vs. Friends and Family
Venmo lets senders tag a payment as “Goods and Services” or “Friends and Family.” Only goods-and-services payments count toward the 1099-K threshold.3Internal Revenue Service. Understanding Your Form 1099-K Rent is compensation for housing, which is a goods-and-services transaction. Venmo charges a 2.99% seller fee on those payments, and that fee is why some landlords ask tenants to send rent as Friends and Family instead.5Venmo. About Venmo Fees
Tagging rent as a personal transfer doesn’t change its character. The income is still taxable, and the IRS can still find it through an audit by comparing bank deposits, Venmo history, and lease agreements. Deliberately misclassifying rent to keep it off the 1099-K also creates an added exposure: if an examiner treats it as disregard of the rules, that opens the door to the accuracy-related penalty discussed below.
The 2.99% fee itself is a deductible business expense on Schedule E, so a landlord who accepts the goods-and-services designation isn’t losing the fee for tax purposes. Keep payment receipts showing the fee amount and it’s straightforward at filing time.
Reporting Rent on Schedule E
If you receive a 1099-K from Venmo, you need to reconcile that number with the actual rent you collected. The 1099-K reports gross goods-and-services activity for the entire year, which may sweep in non-rent transactions if you use the same account for other things, and it won’t capture rent paid by check or cash. Your Schedule E should show all rent from all sources, not just what Venmo reported.2Internal Revenue Service. About Schedule E (Form 1040), Supplemental Income and Loss
Be ready to explain any gap between the 1099-K figure and your reported gross income. Detailed internal records handle this. A spreadsheet or ledger tracking each tenant’s payments by date, amount, and method, plus a year-end download of Venmo transaction history and copies of lease agreements, will support anything on the return.
Deductions That Reduce the Taxable Number
Schedule E also captures the expenses that pull your taxable rental income down. Ordinary and necessary costs of operating the property include:
- Operating expenses like property management fees, repairs, insurance premiums, utilities you pay, advertising for tenants, and the 2.99% Venmo fee on rent payments
- Mortgage interest on the rental property and state and local property taxes
- Depreciation on the building itself, calculated using the straight-line method over 27.5 years for residential rental property6Internal Revenue Service. Publication 527, Residential Rental Property
Depreciation is a non-cash deduction that often creates a paper loss capable of shielding some or all of the current year’s rental income. You depreciate the building only, not the land, and capital improvements like a new roof get added to the depreciable basis.
Estimated Taxes and the Net Investment Income Tax
Nobody is withholding taxes from your rental income, so the IRS expects you to send money in during the year. If you’ll owe $1,000 or more in federal tax after subtracting withholding and refundable credits, you generally need to make quarterly estimated payments using Form 1040-ES.7Internal Revenue Service. Estimated Taxes The deadlines are April 15, June 15, September 15, and January 15 of the following year.8Internal Revenue Service. Estimated Tax FAQs for Individuals Missing them triggers an underpayment penalty plus interest even if you pay the full balance at filing.
Higher-income landlords also face the Net Investment Income Tax, a 3.8% surtax on rental income (and other investment income) once modified adjusted gross income crosses $200,000 for single filers, $250,000 for married filing jointly, or $125,000 for married filing separately.9Internal Revenue Service. Topic No. 559, Net Investment Income Tax The tax applies to the lesser of your net investment income or the amount your MAGI exceeds the threshold. Build this into your estimated payments if you’re near those numbers.
Security Deposits Collected Through Venmo
A security deposit isn’t income in the year you collect it, because you may have to return it.10Internal Revenue Service. Topic No. 414, Rental Income and Expenses That changes the moment you keep any portion of it:
- If a tenant breaks the lease early and you keep the deposit, that amount is income in the year you keep it
- If you apply the deposit to damage repairs and deduct the repairs as expenses, you must also report the retained deposit as income
- If the deposit is used as last month’s rent, it’s advance rent, taxable when received rather than when the tenant occupies the final month10Internal Revenue Service. Topic No. 414, Rental Income and Expenses
A deposit paid through Venmo lands in your transaction history alongside rent, so keep clear records of any refund. That’s what lets you explain why a refunded amount doesn’t show up on Schedule E as income.
Penalties for Leaving Venmo Rent Off Your Return
Skipping rental income has costs beyond back taxes and interest. The IRS treats unreported income shown on an information return like a 1099-K as a potential indicator of negligence.11Internal Revenue Service. Accuracy-Related Penalty
The accuracy-related penalty is 20% of the underpaid tax attributable to negligence or a substantial understatement of income.12Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments It stacks on top of the tax owed, with interest running on both the tax and the penalty until paid. Owe $5,000 in tax on unreported Venmo rent, and you’re looking at a $1,000 penalty plus interest on the full $6,000.
The audit risk isn’t hypothetical. The IRS can cross-reference bank deposits, Venmo activity, and lease agreements to identify rent that didn’t make it onto Schedule E, and routing payments through the Friends and Family tag doesn’t make that trail disappear.
One Boundary: Short-Term Rentals With Services
Not every rental belongs on Schedule E. If you run a short-term rental and provide substantial services to guests, hotel-style things like daily housekeeping during the stay, meals, or concierge services, the IRS treats the activity more like a business. That pushes the income to Schedule C, where it becomes subject to self-employment tax of 15.3% on top of regular income tax. Providing basic amenities like Wi-Fi, heat, and trash pickup doesn’t cross that line. A traditional landlord renting an apartment on a one-year lease and collecting monthly Venmo payments will almost always stay on Schedule E.