The shiny new provisions in the One Big Beautiful Bill Act (OBBBA)âlike no tax on tipsâmay grab the headlines, but thereâs another change that many businesses are cheering: restored reporting thresholds for Form 1099-K (for payment card and third-party network transactions).
The IRS has now issued FAQs to help taxpayers understand how the OBBBA provisions affect Form 1099-K. Hereâs what you need to know.
When It Comes To Forms 1099-K, What Changed Under OBBBA?
Under OBBBA, there are changes to the reporting thresholds for Form 1099-K (for payment card and third-party network transactions), Form 1099-MISC (for payments not covered by other 1099 forms), and Form 1099-NEC (for nonemployee compensation).
Form 1099-K is used to report payments received for goods or services that are processed through payment apps (like PayPal and Zelle), online marketplaces (like eBay), and, of course, credit cards. Itâs issued when you hit certain reporting thresholds.
OBBBA reinstates the $20,000 and 200 transactions thresholds, retroactive to 2022 (or as if the reporting changes American Rescue Plan Act of 2021 had never happened) for certain merchants and businesses. That means that the $20,000 and 200 transactions thresholds will apply to the tax year 2025.
No threshold applies to payment card transactionsâpayment cards encompass credit, debit, or stored value cards, such as gift cards. That continues to be the case under OBBBA.
What Qualifies as a Payment Card?
A payment card includes credit cards, debit cards, and stored-value cards (including gift cards), as well as payment through any distinctive marks of a payment card (such as a credit card number).
What is the Threshold Amount For Form 1099-K For Payments Received Through A Payment Card Transaction?
There is no threshold amount that must be met to receive a Form 1099-K due to payments received through a payment card transaction. Therefore, if you received $0.01 in payments from a payment card transaction, you should receive a Form 1099-K for those payments.
What is a Third-party Settlement Organization (TPSO)?
A TPSO is the central organization that has the contractual obligation to make payments to participating payees (generally, a merchant or business) of third-party network transactions. This includes apps used to handle money transfers between buyers and sellersâthink PayPal or Venmoâor online marketplaces like Etsy or Amazon.
What is the Threshold Amount For Form 1099-K Due to Payments Received Through A TPSO?
TPSOs are required to report when total gross payments for goods or services exceed $20,000 and there are more than 200 transactions for a payee.
Your state may have a lower reporting threshold for TPSOs, which could result in you receiving a Form 1099-K, even if the total gross payments and transactions did not exceed the federal reporting threshold.
Does the Change in TPSO Reporting Threshold Mean I Wonât Get a Form 1099-K if I Receive Gross Payments Totaling $20,000 or Less, or Have 200 or Fewer Transactions?
Not necessarily. A TPSO may still send a Form 1099-K for payments for goods or services below the thresholds as a matter of courseâthereâs no rule that says they canât.
You could also receive a Form 1099-K from other payment settlement entities, such as merchant acquiring entities, because they do not have a de minimis reporting threshold. In addition, if you were subject to backup withholding, a TPSO must file a Form 945, Annual Return of Withheld Federal Income Tax, and send you a Form 1099-K.
And, as noted earlier, your state may have a lower reporting threshold for TPSOs, which could result in you receiving a Form 1099-K, even if you donât exceed the federal reporting threshold.
Do I Have to Report Payments on My Tax Return If They Are Not Reported on a Form 1099-K?
Yes. Regardless of the reporting threshold, all taxable income, including income earned through payment apps and online marketplaces, and income earned from side gigs and contracting jobs, must be reported on your tax return.
What is Reported on Form 1099-K?
The key bit is the gross payment amount, which is reported in Box 1a. It doesn’t include adjustments for fees, credits, refunds, shipping, cash equivalents, or discountsâthose items are not income, and you can deduct those items from the gross amount on your tax return.
The gross payment amount also does not account for the original purchase price (basis) of any items sold, or whether they were sold at a gain or loss. Youâll need to consult other tax and financial records to figure the correct income on your tax return.
When Should I Receive Form 1099-K?
Typically, by January 31 of the year following the transactions.
Are All Payments Reported on my Form 1099-K Taxable?
Not necessarily. As noted earlier, just because a payment is reported on a Form 1099-K does not mean it is taxable. Also, just because a payment is not reported on a Form 1099-K does not mean it is not taxable.
How you report Form 1099-K payment amounts on your tax return depends on the type of payments you received.
For example, if you sell a used personal item for less than you paid for it, you may receive a Form 1099-K, but the sale proceeds may not increase your taxable income because you didnât make a profit or gain.
If I Buy An Item With A Payment Card Or Payment App Or Use An Online Marketplace, Will I Receive A Form 1099-K?
No. You should not receive a Form 1099-K for making purchases. Form 1099-K is used to report certain payments that you received for selling goods or providing services.
How Does a Payment App or Online Marketplace Know If I Receive Payments for Goods or Services As Opposed To Money From Friends and Family?
They donât. Each payment app or online marketplace will have its own processes for categorizing paymentsâfor example, some have different accounts for business and personal transactions. The IRS encourages you to review the policies of any apps or online marketplaces you use to make sure that your transactions are reported appropriately.
Also, be smart. Content creatorsâlike some on TikTokâhave suggested that you can simply move your online business over to a personal account to avoid receiving Form 1099-K. That, they reason, means you won’t have to report that income on your tax return. That’s terrible advice for many reasons. Not only is it tax evasion, but most apps require compliance with their terms and services. If you’re lying about using the app, it may get you booted off and, perhaps, permanently banned.
What Should I Do if My Child or Other Dependent Receives a Form 1099-K?
If your child or dependent provided services for others, was paid through a payment app, sold items via an online marketplace, and received a Form 1099-K, they may need to file a tax return. The regular rules regarding whether to file still apply.
Who Should I Call If I Have a Question About My Form 1099-K (Or if the Information is Wrong)?
Call the person or business who issued Form 1099-K (the contact information is generally in the upper left corner of the form). Donât call the IRS.
What If My Info is Wrong, But I Canât Get a Corrected Form 1099-K?
If you can’t get a corrected Form 1099-K, file anywayâyou can zero out the error when you file your return. (You can find info and examples here.)
If I Receive Multiple Forms 1099-K That Report Proceeds from the Sale of Personal Items Sold at a Loss or Erroneous Forms 1099-K, Can I Combine Them All into One Item on Schedule 1?
Yes. Report the combined Form 1099-K amounts in the entry space at the top of Schedule 1 (Form 1040).
If I Received A Form 1099-K For Crowdfunding Donations, Do I Have To Report It?
Maybe. You may receive a Form 1099-K for money raised through crowdfunding. Some of that money may be taxable to you, and you may be required to report it on your income tax return. Itâs also possible that some of the funds raised may be considered a gift and would not be taxable to you. (If in doubt, consult with your tax professional.)
Will I Get Form 1099-K If I Resold My Taylor Swift Tickets Online?
Probably. The rules related to transactions still applyâpayment settlement entities, including TPSOs, that facilitate ticket sales and re-sales are required to file Form 1099-K if total gross payments and transaction exceed the federal reporting threshold.
Even if you donât receive a Form 1099-K, payments for ticket sales and re-sales might need to be reported on a Form 1099-MISC or Form 1099-NEC. (Those information returns must be filed by any person engaged in a trade or business that makes payments in the course of such trade or business to another person. Those thresholds changed under OBBBA, too. For payments made after December 31, 2025, the reporting threshold for Form 1099-MISC or Form 1099-NEC is met if the amount of payments to a recipient totals $2,000 or more.)
Donât just shake it offâthe income from ticket sales is includible in your gross income.
Why Were There Changes in the First Place?
The changes under OBBBA should mean fewer forms for taxpayers. In 2023, the IRS estimated that up to 44 million Forms 1099-K would be sent to taxpayers.
The goal in changing the reporting threshold for the Form 1099-K originally was increased compliance. According to the IRS, tax gap studies have consistently demonstrated that third-party income reporting significantly raises voluntary compliance with tax laws. For example, computerized document matching in the early 1980sâwhere the IRS matched data reported by third-party financial institutions to data reported by taxpayersâsignificantly reduced underreporting of dividend and interest income. And the 1987 requirement that taxpayers supply Social Security numbers for dependent children resulted in a marked difference in the numbers of dependents claimed on returnsâseven million fewer dependent children were claimed than in the previous year.
This is Good, Right? I Can Rely on This Info?
The IRS issued this guidance in Fact Sheet 2025-08. It is… not short. Iâve summarized the best bits for you, but you can read through the longer version for more details.
The IRS put these FAQs out to get information to taxpayers quickly. But itâs important to understand that guidance found on the IRS website isnât to be treated as gospel. Specifically, as the IRS has reminded us time and again, FAQs and other information on the IRS website are not included in the Internal Revenue Bulletin and canât be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case.
However, if you rely on the FAQs âreasonably and in good faith,â the IRS suggests that you wonât be subject to a penalty where thereâs a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty.
So What Should I Do?
I always encourage taxpayers to consult a tax professional. And, of course, keep checking in with our Forbes team for more information.