Compliance
Compliance Spotlight: What You Need to Know about the Form 1099-K Threshold Reversion
The threshold for issuing Form 1099-K under the One, Big, Beautiful Bill just reverted—discover who’s impacted, how to prepare, and avoid reporting pitfalls.
By NomadicTax Research Team • 5-8 min read • November 20, 2025
## What Changed with Form 1099-K Requirements
On **October 23, 2025**, the IRS released **Fact Sheet 2025-08**, clarifying that under the OBBB Act, the threshold for third-party settlement organizations (TPSOs) to issue Form 1099-K has reverted. Now, these entities must file reports only if a taxpayer has **over $20,000 in gross payments AND more than 200 transactions**, returning to the pre-ARPA standard. ([irs.gov](https://www.irs.gov/newsroom/irs-issues-faqs-on-form-1099-k-threshold-under-the-one-big-beautiful-bill-dollar-limit-reverts-to-20000?utm_source=openai))
This change is retroactive—meaning that even payments made earlier under the old rules are being evaluated against the reinstated threshold. TPSOs include payment apps and online marketplaces. All income remains taxable, regardless of whether a 1099-K is issued, but tax compliance obligations and documentation expectations are shifting.
## Who Is Affected?
- **Small sellers or side hustles**: If you received payments through a payment app, but didn’t exceed both the number-of-transactions and dollar thresholds, you **won’t** automatically get a 1099-K. Perfect if you made $15,000 over 100 transactions, for instance.
- **IPs and gig workers** above both thresholds must still be ready to receive the form, reconcile it with your actual gross income, and report it properly.
- **Platforms and TPSOs** must update their reporting systems and compliance checks to ensure they’re issuing 1099-Ks only where legally required. Mis-issuance could trigger liability or unnecessary confusion.
## Practical Steps to Maintain Compliance
- **Track both your number of transactions and total gross income.** Many tools or apps now offer this. If you hover near either threshold, monitor closely.
- **Maintain good records**: Even if you don’t get a 1099-K, keep receipts, bank statements, and invoices—essential for deductions, verifying income, and audits.
- **Adjust estimated tax payments** for expected income from payment apps. Without a 1099-K to force disclosure, the IRS still expects you to declare income in full.
- **Platforms should update internal thresholds** and messaging. Communicate clearly with their users so they understand when and why forms will be issued.
## Example Scenario
Jane sells handmade crafts via an online marketplace. In 2025, she made **$18,000** gross, spread over **250 transactions**. Under the reverted rules: **no 1099-K** is required, because she didn’t exceed the dollar amount threshold.
However, her friend Mike has 210 transactions with $22,000 gross—**both thresholds exceeded**—so he *will* receive a 1099-K. Both still report full income when filing taxes. Trash your stress by keeping everything documented either way.
## Why It Matters
- Knowing this helps **reduce surprise IRS letters** or audit risks.
- Helps you **plan your finances**, especially if you rely on earnings through apps or platforms.
- Ensures that side income isn’t inadvertently neglected—tax authorities still expect full disclosure.