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What Is Cash App Taxes?
You might have heard Cash App getting talked about when paying your friend back for movie tickets or as a payment method for buying cookies from a local baker. But we bet you haven’t heard of Cash App Taxes— or knew that it was a 100% free way to do your taxes!
What Is Cash App?
Cash App, similar to Venmo, is a financial platform that offers a simple and affordable way to send and receive money, bitcoin, and stocks. Scan people’s “$cashtag” through your phone’s QR scanner, or simply look up their account to send them money, or have them do the same so you can receive it.
What Is Cash App Taxes?
Cash App Taxes used to be called Credit Karma Taxes. You know, the free app that gives you one free credit score lookup per day. They offered free tax filing through Credit Karma Taxes up until November 2021, when they officially moved to Cash App Taxes. But don’t worry— the program is still simple and still free, just like it was before.
What Can (and Can’t) You Do With Cash App Taxes?
For young adults who find tax filing daunting, Cash App Taxes is certainly a much simpler (and faster) way to file your taxes. Filers have the option to do it on the phone or their computer in an app that they’re probably using already!
But there are a few things to know about Cash App Taxes:
What You Can Do With Cash App Taxes
- File your taxes simply. If you’re already using Cash App and get confused by filing by paper (who doesn’t?), Cash App Taxes is a super simple solution.
- File no matter what status you are. You can file whether single, married filing jointly, married filing separately, a widower with a dependent, or a head of household.
What You Can’t Do With Cash App Taxes
- File your business taxes. As a sole proprietor or LLC, you already file your taxes on your personal tax returns, which means you’re able to file your taxes through Cash App Taxes! But if you file your business tax returns separately, which is what an S Corporation, C Corporation, Partnership, and Multi-Member LLC have to do, you need to find something different.
- File as a non-resident alien. That’s what doola is for!
- File part-year, multi-state, or with foreign-earned income.
How to Use Cash App Taxes
If you’re qualified to file through Cash App and are ready for a simple experience, let’s get started; gather up your:
- Social Security Number or tax ID number
- Any other legal documents
- Your tax filing status: the status that determines whether you’re filing as single, married, or widowed. You’ll determine this based on whether you’re married, and if you are, whether you and your partner want to file separately or jointly (there are benefits to each, depending on your situation).
- Your number of dependents: a child, family member, or partner who relies on you for financial support for things like housing, food, and clothing. Dependents are tax credits, so it’s important to include them if you have them.
- Your tax forms: like a W-2 if you’re employed full-time, a 1040 if you’re self-employed, and a 1099 for each source of income you’ve received funds from. There are additional forms you might need depending on your line of work and whether you’ve accrued funds through passive income. Speak to a tax professional to make sure you have all the proper forms before filing.
- Download and create your account. Whether you’re filing on your cell phone or online, Cash App must be downloaded on your phone to start filing.
- Import your tax information from last year. When you file your taxes online your info is saved. So if you filed on a separate tax software, like TurboTax, you can import your documents.
- Follow Cash App’s instructions. Cash App will walk you through the process of filing your taxes, taking the guesswork out of taxes.
The Benefits of Cash App Taxes
- It’s a familiar place. If you already know how to use Cash App Taxes, learning how to pay taxes through it can be simple!
- It’s free. Cash App is a free alternative if you want to save money paying a CPA or accountant, or if you’re not ready for tools like TurboTax.
- It offers free audit defense to help if you get audited.
Things to Take Note of When Filing Your Taxes
Standardized or Itemized Deductions
A standardized deduction is an amount that can reduce the income you’re taxed on using a generic, standard rate. For those single or married filing separately, the standard deduction is $12,950, for married filing jointly or a qualifying widow(er), it’s $25,900, and for the head of household, it’s $19,400.
An itemized deduction is for when you know the expenses that can lower your taxable income are greater than the standardized rate. You’ll use this if you have lots of expenses like medical bills, experienced theft or loss, contributed to multiple charities, or have other deductions that can make your taxable income even lower.
Bookkeeping will help you manage your earnings and expenditures throughout the year. While Cash App Tax and other tax programs can help you file, it’s up to you to manage your money throughout the year so you’re providing accurate information.
doola Bookkeeping Can Make Tax-Time Organized
Successful year-round bookkeeping yields a successful tax season, and with all the work you’re doing as a business owner, why put one more thing on your plate? Contact our doola bookkeeping specialists today to get your finances prepped for tax time and beyond.
FAQs
Do we have to pay taxes on Cash App?
You must pay taxes on business transactions on Cash App. Personal transactions, like paying a friend back for dinner, are free.
Is Cash App tax safe?
Yes, Cash App is an authorized IRS e-file provider which means it’s part of a national listing of businesses that’s been accepted into the program overseen by the IRS.
Does Cash App charge a monthly fee?
No— Cash App doesn’t have any monthly fees.
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