What’s Changed with Form 1099-K Reporting
Under the One, Big, Beautiful Bill (OBBB) signed into law July 4, 2025 (Public Law 119-21), Congress reinstated the former $20,000 and 200‐transaction threshold for Form 1099-K reporting for third-party settlement organizations. This undoes the lower $600 threshold introduced by the American Rescue Plan Act of 2021.(irs.gov)
Thus:
- If you receive payments through platforms like Venmo, PayPal, Etsy, etc., you only need to receive a 1099-K if you have over $20,000 in gross payments and more than 200 transactions in a calendar year.(irs.gov)
- The $600 threshold and “no‐transaction count” rule under ARPA no longer apply to those third-party settlement payments.(irs.gov)
Who Is Affected—and Who Is Not
| Its For | How You’re Impacted | Exceptions to Know |
|---|---|---|
| Gig workers, casual sellers (crafts, side jobs), small-scale online services professionals | You’ll likely receive fewer 1099-K forms unless volume justifies it. Reduced paperwork. | Payments via credit/debit cards or direct settlement by payment cards still get reported regardless of the amount.(irs.gov) |
| Payment platforms and third-party settlement organizations | Less frequent filings of 1099-K forms to IRS and to payees unless threshold met. | Platforms still may choose to issue them for other tracking or customer service reasons. |
Practical Steps to Stay Compliant
- Document all income—don’t rely solely on receipts from 1099‐Ks. Even payments not reported on 1099-K are still taxable if for goods or services.
- Track transactions—volume matters now. Keep detailed logs of each transaction, even small ones, to know whether you might cross the 200-transaction trigger.
- Review platform reports—compare statements from platforms against your own records. Platforms sometimes report gross before fees or refunds.
- Update bookkeeping tools to filter which transactions are reportable, and flag when thresholds are met.
- Consult a tax pro if you run into gray areas—e.g., multi-platform sales, mixed personal vs. business sales, or handling fees/refunds.
Why This Matters
- Reduced burden for small sellers: fewer forms to process when earnings or transaction counts are modest.
- Clarity and consistency: reinstates pre-2021 rules many were used to.
- Still tax liabilities remain—income must be reported even if no 1099-K is issued.
Example Scenario
Lily sells handmade jewelry via an online marketplace. In 2025 she made 150 sales (transactions) totaling $18,000 in gross amounts. Under the reinstated threshold, Lily will not receive a 1099-K for those sales—though she’ll still need to report the income on Schedule C and claim business expenses. If Lily instead made 250 transactions totaling $25,000, she would receive a 1099-K.
This change takes effect retroactively so that tax years beginning since ARPA’s changes are viewed under the OBBB standard. It’s a win for many small business owners and casual sellers—but double-check your platforms and recordkeeping to keep everything tidy.