Compliance
Navigating the Reverted 1099-K Threshold: What Small Sellers Must Know
The One, Big, Beautiful Bill reverts the reporting threshold for third party settlement organizations back to over $20,000 and more than 200 transactions—impacting many online sellers and gig workers.
By NomadicTax Research Team • 5-8 min read • November 16, 2025
## 1099-K Thresholds: Big Reversal Under OBBB
Under the One, Big, Beautiful Bill (OBBB), the IRS has **retroactively reinstated** the reporting rules for Form 1099-K that were in place prior to the American Rescue Plan Act of 2021. This means that **third party settlement organizations (TPSOs)** must report payments only if:
- The gross amount exceeds **$20,000**, _and_
- There are more than **200 transactions** to the same payee.
For smaller sellers, gig workers, or side hustlers, this may mean **you’ll avoid the flood of 1099-K forms** you expected.([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))
## What This Means for Sellers and Platforms
- **Selling online?** If your annual $ value is below $20,000, or you have fewer than 200 transactions, you likely won’t receive a 1099-K just because you use multiple platforms.
- **Gig and service income:** Even if no 1099-K is issued, you must still report **all income earned**. IRS doesn’t require 1099-K-income only for withholding, but for reporting on your tax returns.
- **Platform operators** now have compliance relief: less burden unless both thresholds are met. But be aware of state law differences.
## Actionable Tips to Stay Compliant
- **Track all your payments and transactions**, even small ones. You’ll need them for your own income reporting—especially if tax software or IRS notices probe “unreported income”.
- **Retain records** of costs, buyer info, and platform statements. This helps establish basis and document your profit.
- If multiple platforms are used, **aggregate transaction counts** per platform, not combined across all. The rule is threshold per platform.
## Example Scenarios
- **Maria sells handmade jewelry** online 150 times a year through an app, making $25,000. Since 150 transactions <200, no 1099-K required.
- **James is a ride-share driver**, with 250 transactions earning $15,000. Though he has many transactions, the gross payment is less than $20,000—still below threshold.
- **Linda sells custom woodwork**: 300 transactions totaling $22,000. Both thresholds exceeded—she’ll receive a 1099-K. She should prepare by tracking costs and properly reporting income.
## Why It Matters Now
- Low earners can breathe a sigh of relief—less paperwork, more clarity.
- The retroactive nature means **2025 is subject**, so your 2025 online sales may trigger or avoid 1099-K depending on your totals.
- Software and platforms are updating their reporting systems—don’t assume past rules still apply.
### TL;DR
Form 1099-K won’t cross your tray unless you hit **both** the $20,000 and 200 transactions mark under the post-OBBB law. But for all income, big and small, **record everything**—your tax return depends on it.
**Category:** Compliance