U.S. Income Taxes and Electronic Payment Transfers
(e.g. PayPal, Venmo)
April 30, 2026
For US’ers who handle money from RC classes, workshops and other events.
Tax implications of money collected for RC workshops, webinars, classes, etc.
This is an update on Using Third Party Apps (such as Venmo, PayPal, and CashApp) and some suggestions about reporting money received and how to handle disbursement of workshop funds.
As of December 2025, Third party settlement organizations (TPSOs) (which include payment apps such as Venmo, PayPal and CashApp) are required to report payments on Form 1099-K when the total amount of payments you receive for goods or services through the platform exceeds $20,000 in more than 200 transactions.
https://www.irs.gov/businesses/understanding-your-form-1099-k
When researching this information about IRS procedure, I learned about other things we should keep in mind for best practice. We don’t want RC (in the form of an RC organizer or RC event) to get in trouble with the IRS. Here is a summary of things to think about.
We should all report to the IRS our RC income whether it’s from teaching, leading, or organizing. You can deduct expenses which can include anything that makes it possible for you to do your RC job - attending workshops (both the fee and the expense of getting there), attending a class or gather in, buying literature. For many of us that means that we will show no profit on our taxes – expenses will exceed income.
If you regularly make a profit over expense in any year, you are seen as having a business for tax purposes. If you regularly have more expenses than profit, you have a “hobby,” which is the IRS’s word. In addition to meaning that you had more expense than income, it also means that you do not do the activity to make a profit. Hobby income must still be reported.
Some of us have the feeling that we are not a real business. Since we handle small amounts of funds and only handle funds a limited number of times in a year, we may think we can avoid “business practices.” In the eyes of the IRS business is taking place, every time we collect workshop fees. People access RC classes and workshops by paying a fee. We, as organizers pay leaders and are paid as organizers. Workshops often take in more than basic expenses and distribute the net income which is like profit. This is all seen as “business” to the IRS and needs to be handled in a business-like manner.
An area where practice varies among RC’ers is whether to use 1099 forms. This is an IRS form that you send to the leader of a workshop who has earned more than $599.99 and to the IRS so they are aware that you paid the leader the fee. (This of course obligates the leader to report that income so let the know if you are going to do that)
Tax professionals and some RC organizers told me that any business that pays people needs to issue 1099’s. Some people think this is unnecessary. Keeping careful records is enough and it is up to the person who receives that money to report their income. With either practice, you should keep a careful record of who you paid so that you can show the money was passed along if the IRS asks.
Other good practices when handling RC money.
Have a separate bank account for RC money handling. Your income and income from workshops you organize could go in there, separate from the rest of your personal or other work funds. This is not required but helpful.
One tax advisor told me that you want to report everything up front rather than wait for the IRS to come looking for you for not reporting. To report it all up front, report it as a business on Schedule C. Even if you have more expenses than income, you can use this schedule (form) to report all money that came in through 3rd party apps and checks, etc. You can list all expenses and disbursements as well.
Some people are choosing the route of reporting income such as organizer’s fee but not reporting the rest of the workshop money even though it may have come to them through a 3rd party app such as Venmo, PayPal. They keep careful records so they can show how the money was disbursed if the IRS asks.
What are the potential consequences of this? Because of 3rd party app reporting, the IRS will know about the total income that you took in (if it’s over $20,000) and could question or audit you. If you can show how the money was disbursed, there will be no tax liability.
Note, the IRS can look back several years so if you keep records, you need to store them for several years.
Note that I am not a tax professional. For reliable advice, consult a tax professional and/or read the IRS publications.
Gladys Maged
Somerville, Massachusetts, USA