Compliance
Understanding the Reverted Form 1099-K Threshold and Obligations for Gig Workers
The threshold for reporting 1099-K has reverted under the OBBB—gig workers and online sellers needs to know what changes in reporting mean and how to stay compliant.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## What Changed with the 1099-K Threshold
- Under the **One, Big, Beautiful Bill (OBBB)**, thresholds for TPSOs (third-party settlement organizations) reverted to **$20,000 in gross payments and more than 200 transactions** for reporting goods or services. ([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))
- Affected payees include **marketplace sellers, gig economy workers**, apps like rideshare or delivery platforms, and any third-party payment processors for goods/services. ([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))
## Compliance Requirements Going Forward
### For Payment Settlement Platforms / TPSOs
- If you facilitate payments and meet the threshold, you **must issue 1099-K** to payees and file with the IRS.
- Ensure systems accurately capture both gross amounts and transaction counts. Even high gross with few transactions, or vice versa, matters. ([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))
### For Gig Workers / Online Sellers
- Report Form 1099-K income. Compare with totals from settling entities.
- Keep thorough records of business expenses, cost of goods sold, vehicle, supplies, home office if applicable—these offset gross receipts.
- If you receive Form 1099-K unexpectedly (or not at all), still report income correctly.
## Digital Nomad / Cross-Border Considerations
- A U.S. citizen or resident abroad earning income via TPSOs may still receive 1099-K; foreign-source taxes and foreign tax credits may apply when taxed by other jurisdictions.
- Be mindful of foreign bank or payment platform statements; mismatches can trigger IRS notices.
## Practical Example
- **Example**: A rideshare driver earned $22,000 over 210 trips via app. Under the new rule, the platform must issue 1099-K because it exceeds *both* $20,000 and 200 transactions.
- **Counterexample**: A seller made $25,000 through only 150 transactions—*no* 1099-K under the $20,000-and-200 test (unless card payments apply). Expenses still deductible.
## Actionable Advice
- Sellers: Check your transaction count—not just gross volume. If approaching either limit, prepare accordingly.
- Platforms: Update merchant and user databases now to capture necessary data—transaction count, payee SSNs or ITINs.
- Consult a tax professional if in gray area—for example, mixed income sources or foreign sources.
Understanding the reinstated 1099-K threshold is crucial for financial planning and avoiding penalties. Proper recordkeeping and awareness will save time and stress.