Understanding the tax implications of participating in rotating savings circles (susu, tanda, ROSCA)
This page provides general educational information about the tax treatment of rotating savings circles. This is not tax advice. Tax laws are complex and vary by jurisdiction. Your individual circumstances may differ. We strongly recommend consulting a qualified tax professional (CPA, enrolled agent, or tax attorney) for advice specific to your situation.
Generally, no. Standard susu payouts are typically considered a return of pooled contributions, not taxable income. You're receiving back what you and other members contributed—there's no profit or gain.
In a traditional rotating savings circle, the tax treatment is straightforward because of how the money flows:
Members: 10 people
Contribution: $100/month per person
Duration: 10 months
Monthly pot: $1,000 (10 × $100)
Your total contributions: $1,000 (10 months × $100)
Your payout received: $1,000 (one time)
Net gain/loss: $0 — Nothing to report
The IRS generally treats return of your own principal as non-taxable. Since you receive exactly what you contributed (just at a different time), there's no taxable event. This is similar to:
| Type of Payment | Taxable? | Explanation |
|---|---|---|
| Standard susu payout | No | Return of pooled contributions, no gain |
| Your contributions | No | You're spending your own money |
| Interest earned on pooled funds | Yes | Interest income is always taxable (SusuFlex does not generate interest) |
| Referral bonuses | Yes | Income for promoting the service |
| Sign-up bonuses | Yes | Promotional income |
| Cashback rewards | Maybe | Generally treated as rebates (not taxable), but large amounts may be scrutinized |
| Circle organizer fees | Yes | Self-employment income if you charge fees |
| Early payout premium paid by others | Maybe | Gray area; consult a tax professional |
For standard susu payouts: No. The IRS requires 1099-K forms for payments received for goods or services. Susu payouts are neither—they're return of pooled member contributions.
1099-K forms are issued by payment platforms like PayPal, Venmo, and Stripe when you receive payments for goods or services. Personal transfers and susu distributions are not reportable because they're not business income.
For standard susu participation where your contributions equal your payouts:
For referral income or other bonuses:
Even though susus are generally not taxable, good records protect you:
The IRS generally recommends keeping tax records for 7 years. This covers:
Create a "SusuFlex" folder and each January, save your annual statement showing:
Yes. Rotating savings circles have been practiced legally in the United States for over a century. They're recognized as legitimate informal savings arrangements because:
Large bank deposits can sometimes trigger bank reporting (Currency Transaction Reports for cash over $10,000), but electronic susu payouts from SusuFlex are not cash transactions. If your contributions over the circle equaled your payout, you have documentation showing it's return of principal, not income.
No. Susu contributions are personal savings, not charitable donations or business expenses. They're not deductible.
As long as your total contributions across all circles equal your total payouts, the amount doesn't matter for tax purposes. Keep good records showing the equal exchange.
Yes. Tips, fees, or any payments beyond your standard payout are taxable income. Report on Schedule C if it's a regular activity.
It's good practice to mention it, especially for large amounts. Your CPA can confirm it doesn't need to be reported and can advise on record-keeping.
Tax laws change frequently and vary by state and country. This information reflects our understanding of U.S. federal tax treatment as of December 2025. Always consult a qualified tax professional for advice on your specific situation. SusuFlex provides this information for educational purposes only and assumes no liability for tax decisions made based on this content.