Zelle tax reporting: Here’s what to include on your return

Core Insights - Zelle does not issue Form 1099-K and is exempt from IRS reporting requirements for third-party payment apps, but business income received through Zelle must still be reported on tax returns [1][4][10] Group 1: Zelle's Functionality - Zelle operates as part of the payment networks between participating banks, allowing users to make transactions directly between bank accounts rather than holding funds on a platform [2][3] - Unlike other payment apps like Venmo and PayPal, which function as digital wallets, Zelle transfers money directly between users' bank accounts [3] Group 2: Tax Reporting Implications - Payments received through Zelle for goods and services are still subject to tax reporting rules, despite Zelle not providing a Form 1099-K [4][6][10] - Personal payments, such as reimbursements among friends and family, are not taxable, but business payments must be reported [6][10] Group 3: Compliance and Record-Keeping - Self-employed individuals must track their earnings and report them on Schedule C of Form 1040, even though Zelle does not report transactions to the IRS [5][7] - If a business client pays $2,000 or more via Zelle, they are required to issue a Form 1099-NEC, reflecting the recent increase in the reporting threshold [8] Group 4: Zelle's Operational Changes - Zelle is not shutting down, but its standalone mobile app is no longer available, as the majority of transactions were initiated through banks [11]