Why Digital Nomads Should Care About Form 1099-K Changes
Digital nomads often earn small payments across multiple platforms. Under recent OBBB law and IRS guidance:
- Platform payments may now be reported if gross payments exceed $2,500 in 2025, and drop to $600 in 2026.
- Even if you don't meet thresholds, if you receive a form, the IRS has the data — you must report all income. (irs.gov)
Backup Withholding & TPSO Responsibility
- Starting 2025, third-party settlement organizations (payment apps, marketplaces) must perform backup withholding (24%) if you haven’t provided a valid Social Security Number or TIN, regardless of transaction count.
- Penalties apply if the organization fails to withhold when required.
Keeping Records & Handling Reports
- Track all platform income, fees, refunds, and basis (cost of any goods sold). A $5,500 total from many small sales may trigger a Form 1099-K under new limits.
- If you sell items at a loss, you still might receive a form; rules allow you to offset non-taxable or loss-making items.
- Ensure your payment platforms have correct identity info (name, SSN/TIN) to avoid unnecessary withholding.
Example: A Nomad Selling Digital and Physical Goods
Jana sells digital course content and crafts across two platforms. In 2025, she receives $3,000 from Platform A and $1,500 from Platform B. Neither gives her the 1099-K because thresholds differ per platform. When she files for 2025 U.S. taxes, she must report $4,500 total gross revenue, minus fees and expenses, even without a printed 1099-K. Her AGI is $45,000 so no phase-outs for deduction eligibility; she ensures she has a valid SSN on file to avoid backup withholding.
Actionable Takeaways for Digital Nomads
- Keep a clean record: save statements, receipts, platform dashboards.
- Invoices & cost basis matter: deduct fees, shipping, production cost.
- Watch when platform thresholds change: 2026 brings a major drop to $600.
- Ensure your TIN is properly provided to each platform.
Bottom Line
The landscape is shifting—platform income that was under-the-radar under last thresholds may now trigger reporting. Record-keeping, awareness of thresholds, and correct identity info are vital for digital nomads to stay compliant and avoid surprises.