Zelle Tax Reporting: Why It’s Not Like Other Payment Apps

The tax reporting protocols associated with most online marketplaces and payment apps like Amazon, PayPal, Cash App, and Venmo are similar for self-employed individuals. Once you hit the payment threshold–$2,500 or more in 2025, down from $5,000 or more in 2024–those marketplaces and payment apps are obligated to send you IRS Form 1099-K by January 31.

This form reports payments received for goods or services during the tax year from: 

• Credit, debit, or stored value cards, such as gift cards 

• Payment apps or online marketplaces, also known as third-party settlement organizations (TPSOs)

Most people would include Zelle, which provides a streamlined method to send and receive money with friends and family via a bank or credit union’s mobile application or online banking system, with payment apps like PayPal and Venmo. Because Zelle functions differently, the platform is not responsible for sending you tax Form 1099-K, but that doesn't mean you're not responsible for reporting eligible income to the IRS.

Use this article to learn about Zelle tax reporting essentials. 

• How these transactions should be reported

• What reporting requirements rest with you

• When income from the Zelle network should be reported

Zelle & IRS Reporting: Differences with Other Payment Apps

The Zelle payment platform is co-owned by some of the largest financial institutions in America, including: 

• Bank of America

• Capital One

• Chase

• PNC

• Truist

• U.S. Bank

• Wells Fargo

Unlike payment apps and other payment networks that may use a digital wallet for business transactions, Zelle never touches the funds that are sent and received directly between users. This critical distinction is why Zelle isn't obligated to send 1099-K forms even if you've met or exceeded the 2025 reporting threshold.

Does Zelle Report Payments to the IRS: Form 1099-K Details

IRS Form 1099-K reports payments received for goods or services during the tax year from credit, debit, or stored value cards and TPSOs. The 2025 reporting threshold is $2,500 or more, which will be reduced to $600 in 2026.

Any business or platform issuing you a Form 1099-K must provide a copy directly to the IRS. Due to Zelle's functionality, the platform is not obligated to issue a 1099-K to you, the IRS, or any qualifying state agencies.  

Reporting Zelle Taxes: Quick Guide

Do I have to report income from Zelle?

You must report eligible income from Zelle and any other funding sources. Self-employed individuals who made $400 or more in a year from Zelle and elsewhere are responsible for filing an annual income tax return and estimating and filing quarterly taxes four times annually.

Zelle payments classified as personal transactions to and from friends and family from their personal bank accounts are not considered taxable business income. Only eligible business payments should be reported.

Do I have to pay taxes on Zelle income?

If your business income from Zelle and other sources was $400 or more for the year, you will be responsible for filing an annual income tax return and quarterly estimated taxes. You must also pay the 15.3% self-employment tax.

Beyond Zelle's unique Form 1099-K exemption, treat business income from Zelle as you would any other source. 

How do I report Zelle income on my taxes?

Reporting eligible business income received through Zelle requires more effort versus payment apps that send IRS Form 1099-K to users. Form 1099-K is used as supporting documentation as you prepare your tax return that details transactions for the year from a particular platform or payment application.

You must keep detailed records of all Zelle transactions throughout the year and then use that data in place of a 1099-K to prepare and submit your tax return. Forms you may use to file your self-employment taxes and claim tax deductions include: 

IRS Form 1040

Individual taxpayers file IRS Form 1040, U.S. Individual Income Tax Return. Form 1040 calculates your federal taxable income and tax liability. You should also file schedules to report your self-employed income: Form 1040 Schedules C and SE.

Form 1040, Schedule C

Unless you elect to form as a different business entity, self-employed individuals represent sole proprietors for federal income tax purposes. To report business income and expenses, you should file IRS Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). Schedule C calculates your business income or loss from self-employment.

Form 1040, Schedule SE

You must also pay the 15.3% self-employment tax on your self-employed income. Sole proprietors must calculate self-employment tax liability using IRS Schedule SE (Form 1040), Self-Employment Tax. You can claim half of what you paid in self-employment taxes as a deduction.  

Self-employed individuals must also estimate and pay quarterly estimated taxes throughout the year. Quarterly estimated tax payment due dates for 2025 include the following: 

• April 15, 2025

• June 16, 2025

• September 15, 2025

• January 15, 2026

Form 1040, Schedule ES

Use IRS Form 1040-ES, Estimated Taxes for Individuals, to calculate and pay your quarterly estimated taxes. The form includes tax information such as payment vouchers and instructions for filing online.

Get Expert Advice on Reporting Your Business Income

Accurately tracking Zelle business income throughout the year on top of your other business and tax reporting requirements can be challenging as you grow your business. That's why many self-employed freelancers and small business owners trust the tax professionals at 1-800Accountant, America’s leading virtual accounting firm, for their accounting needs.

Save time and achieve your annual financial goals this tax season with our suite of affordable, tax-deductible financial services. Schedule a quick consultation–usually 30 minutes or less—to learn how tax advisory, quarterly estimated taxes, and business tax preparation and filing will help your real estate business maintain full IRS compliance with maximum tax savings.

Zelle Tax Reporting FAQs

Does Zelle share anything with the IRS?

Unlike other payment processors and payment services, Zelle will not submit forms or data to the IRS, businesses using the platform, or state government bodies. It is the responsibility of businesses that use Zelle to track and retain records and materials associated with Zelle digital payments that are essential to preparing and filing their annual tax return and quarterly estimated taxes. 

Do all Zelle transactions need to be reported?

All Zelle transactions do not need to be reported to the IRS. Personal payments from friends and family on Zelle are not considered taxable business income and do not need to be reported. If your business income was less than $400 in a year from Zelle or multiple sources, that income does not need to be reported. However, if you've made $400 or more in business income in a year, you would report that income, including any received from Zelle. 

What happens if Zelle transactions are not reported?

Failing to report eligible business income may result in penalties and increased scrutiny from the IRS. If you need more time to file your business taxes, file a six-month extension. Your tax extension provides additional time to file your return but not extra time to pay. You can avoid interest or underpayment penalties by paying your entire tax liability before the original tax filing deadline.