Restoring the Threshold: What Changed
Under the One, Big, Beautiful Bill (OBBB), the IRS reinstated the pre-American Rescue Plan threshold for emitting Form 1099-K: that is, payment settlement entities are required to report payments only if both of these are met: (1) gross payment transactions to a payee exceed $20,000 and (2) the number of transactions exceeds 200 during the year.(irs.gov) Previously, the threshold had dropped to $600 regardless of number of transactions, creating new reporting burdens. OBBB brought back the old threshold effective retroactively.
Who’s Affected
- Gig economy workers (rideshare, delivery services, etc.): when earning via payment apps, only large volumes and transaction counts trigger a 1099-K.
- Online sellers / makers: if you're selling products or services through platforms, the threshold matters for collecting data and audit risk.
- Small businesses receiving payments via card or payment processors: note that card payments are reported regardless of amount (different from third-party networks).
Action Steps for Compliance
- Monitor your transaction count and total gross payments separately—not just dollars. Even if you exceed $20,000, if you don’t exceed 200 transactions, 1099-K may not be triggered.
- But remember: regardless of whether you receive a 1099-K, you must report all income on your tax return. Records must be kept.
- Review your income streams across platforms—Uber, Etsy, etc.—to aggregate amounts appropriately.
- Use bookkeeping tools to track both transaction volume and gross receipts.
Example Case
Sarah delivers food via two apps. Over the year, she receives $25,000 in payments via App A, but only 180 transactions. App B pays her $5,000 through 50 transactions. Under the reinstated threshold, she will not receive a 1099-K from either, because neither meets both conditions. Still, Sarah must include all $30,000 in her gross income.
Risks & Opportunities
- Risk: Overlooking income since receiving no 1099-K may cause under-reporting.
- Opportunity: Reduced reporting burden for lower-volume operators.
- Tip: Maintain strong records—even when no form is received, proof of income and cost of goods or services will protect in audits.
Moving Forward
- Check payment processors’ policies—some may issue 1099-K even if thresholds are not met (state laws may differ).
- Plan ahead: if you see transaction volume growing, anticipate crossing the threshold, and adjust bookkeeping accordingly.
- Consider consulting a tax professional if you're at or near the threshold to avoid surprises.
By staying on top of the now restored 1099-K rules, you can better manage tax risks, reduce stress at filing time, and maintain organized records year-round.