Compliance
Navigating the Revised Form 1099-K Rules: Compliance for Sellers, Gig Workers, and Platforms
Due to the One, Big, Beautiful Bill, reporting thresholds for Form 1099-K have reverted, greatly affecting small sellers and gig workers. This article outlines compliance duties, what’s changed, and real-world examples of how to avoid pitfalls.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## What Changed with Form 1099-K under OBBB
As of July 4, 2025, the OBBB Act retroactively reinstated the Form 1099-K reporting threshold that existed before the American Rescue Plan Act (ARPA). Now, third-party settlement organizations must issue a Form 1099-K only if **gross payments exceed $20,000 AND there are more than 200 transactions** per payee. ([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 reverses the lower threshold of **$600 regardless of transactions count** under ARPA. ([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))
## Who Needs to Comply and What to Watch Out For
| Stakeholder | What They Must Do | Key Risks |
|------------|------------------|------------|
| Individuals / side hustlers | Track income via payment apps, note whether Form 1099-K arrives; report all taxable income regardless of whether a Form is received. | Surprises if threshold hit unexpectedly; missing deductions or reporting mistakes. |
| Platforms / TPSOs | Issue Forms 1099-K only when both thresholds met; provide informational resources. | Penalties for incorrect forms; confusion over gross vs. net payments; state rules may differ. |
| Tax professionals | Advise clients on income reporting; help clients verify income even without 1099-K. | Underreporting risk, audit exposure; clients may misclassify personal vs business income. |
## Actionable Steps to Ensure Compliance
- **Maintain detailed transaction logs** through your payment platforms and bank statements. Don’t rely only on Forms 1099-K arriving.
- If you occasionally sell items online, check if you separately collect reports or annual summaries to reconstruct income.
- If you’re a small business or saver selling goods, separate business vs personal sales, track cost basis (what you paid for materials) to compute gains properly.
- When dealing with contracts or payments, understand gross payments include the full amount before fees, refunds, or returns. These are separately deductible if properly documented.
## Compliance Example
Lia sells handmade crafts on Etsy. In 2025 she receives $21,000 in gross payments over 210 transactions in a calendar year. Under OBBB’s reinstated rules, she will get a Form 1099-K because both thresholds are exceeded. She must report as income, but she has business expenses such as materials ($5,000), shipping ($2,000), and platform fees ($1,500), which she can deduct. Even without the 1099-K, she should keep these records and report accurately.
On the other hand, Michael has 250 transactions but only $18,000 in gross payments. He won’t receive a 1099-K due to not meeting the dollar threshold, though he still must report income if taxable.
## Recommended Best Practices
- **Check the date of transactions**: since the threshold rule is retroactive under OBBB, ensure 2025 activity evaluated properly.
- **Use accounting or tracking software** if you have many transactions across platforms.
- **Consult a tax professional** especially where you have mixed personal and business use or when gross income is close to threshold.
## Bottom Line
While the reinstated threshold eases the burden for many low-volume sellers, compliance still matters. Always report taxable income, keep solid records, and be proactive about understanding platform reporting behavior. With better planning, you can avoid common pitfalls.