1099-K Thresholds: What’s Changed & Why It Matters
Under the One, Big, Beautiful Bill, the threshold for third-party settlement organizations to report payments via Form 1099-K has reverted to $20,000 gross and 200 transactions. (irs.gov) This is a rollback from recent years with much lower thresholds. For people receiving payments from marketplaces, this means many fewer filings for smaller sellers.
Employee Retention Credit (ERC) Limitations for Late Claims
The IRS released Fact Sheet 2025-07 clarifying that ERC claims for Q3-Q4 of 2021 filed after January 31, 2024 may now be limited or disallowed under OBBB provisions. (irs.gov) If you claimed the ERC late for those quarters, double-check your documentation; you may need to respond or appeal. Employers must ensure they fit the exception criteria and apportioned timelines.
Best Practices for Compliance
- Review any payments received via third-party platforms (e-commerce, ride-sharing, gig-work). If you had fewer than 200 transactions and under $20,000 gross in 2025, you might not receive a 1099-K—still prepare your own tally.
- For ERC: Gather all documentation of wages, payroll taxes and dates. If you filed after Jan. 31, 2024 for Q3 or Q4, assess whether you're still eligible or if forms need correction.
- Use IRS calculators/tools and check FAQ updates: Fact Sheet 2025-08 for 1099-K; Fact Sheet 2025-07 for ERC. (irs.gov)
Real-World Example
Jane Doe sold handmade crafts on an online marketplace in 2025: 180 transactions, $15,000 in gross sales. Under new rules, no 1099-K is required, and Jane reports her income via Schedule C as usual without that form. Meanwhile, ACME Corp. claimed an ERC refund for Q4 2021 filed in mid-2024. Under OBBB, ACME’s claim is now limited—unless they filed timely or fit the narrow exceptions in the law.
Penalty Exposure & How to Avoid It
Failing to report when you should can lead to underpayment penalties, but the IRS has designed many of the OBBB provisions with transition relief for 2025—such as for car loan interest reporting and initial reporting requirements for tips and overtime. (eitc.irs.gov) Still, for 1099-K and ERC, no broad relief—these rules are in effect as written, so compliance matters.
Compliance Checklist
- Confirm if you meet the threshold for 1099-K in 2025 ($20,000 and 200 transactions).
- Review whether your ERC claims (especially filed after Jan. 31, 2024) for Q3-Q4 2021 will be accepted or limited.
- Use the updated fact sheets from IRS.org to guide your actions.
- Keep accurate records of payments & transactions, even if you think they fall under thresholds—better safe than penalized.
Bottom line: The OBBB brings helpful reforms, but also tighter rules in some areas. By staying proactive and aligned with the latest IRS guidance, you can avoid surprises come filing season.