Zelle does not report to IRS

Eligible small businesses can use Zelle to send and receive money. Zelle does not report transactions made on the Zelle Network to the IRS, including payments made for the sale of goods and services. The law requiring certain payment networks to provide forms 1099-K for information reporting on the sale of goods and services does not apply to the Zelle Network. If payments you receive on the Zelle Network are taxable, it is your responsibility to report them to the IRS.

If you're a sole proprietor, you'll report the income on Schedule C (Form 1040). You'll need to include the total amount of payments you received through Zelle together with other non-credit card sales, such as checks and cash on Line 1 (Gross receipts or sales). You should also include any expenses you incurred while conducting your business on Schedule C.

Take the time to make sure the amount reported on the 1099-K is not already reported on Form 1099-NEC. You don’t want to accidentally double up on the same income reported on both Forms.

As a sole proprietor, you'll need to pay self-employment tax on your net earnings. You'll need to use Schedule SE (Form 1040) to calculate your self-employment tax.

Form 1099-K does not apply to personal payments made to relatives and friends through payment networks that were gifts or other types of payments.