Form 1099-K Threshold Returns to $20,000 and 200 Payments

On Oct. 23, 2025, the IRS published frequently asked questions in Fact Sheet 2025-08 about the Form 1099-K reporting threshold (IRS news release IR-2025-107). The 2025 tax law the IRS calls the One, Big, Beautiful Bill restored, retroactively, the threshold that applied before the American Rescue Plan Act of 2021. Payment apps and online marketplaces, which the IRS calls third party settlement organizations, don't have to file a 1099-K for you unless both of these are true:

• The gross amount of payments to you for goods or services is more than $20,000, and
• The number of those transactions is more than 200.

Why this matters

The American Rescue Plan Act of 2021 had lowered the threshold to $600, so many casual sellers, drivers and freelancers expected a 1099-K for small amounts. With the old test restored, far fewer people who use payment apps will get one.

What hasn't changed

The income is still taxable. In its January 2026 release on related rules, the IRS repeated that reporting thresholds don't affect whether income is taxable (IR-2026-03). If you sell goods for more than you paid or get paid for services, you report that income whether or not a 1099-K arrives.

Card payments are different. If customers pay you directly by credit, debit or gift card, your card processor sends a 1099-K no matter how many payments or how much (IRS, "Understanding your Form 1099-K").

You may still get one below the threshold. The IRS notes that platforms may send a 1099-K for smaller amounts or fewer transactions. If you do get one, it's also reported to the IRS, so it needs to be handled correctly on your return.

Personal payments shouldn't be on it. Money from friends and family as a gift, or to pay you back for a shared meal or rent, isn't taxable and shouldn't be reported on a 1099-K. Mark such payments as personal in the app when you can.

Backup withholding follows the same line

On Jan. 8, 2026, Treasury and the IRS proposed regulations under which payment platforms generally wouldn't have to backup withhold on payments through their networks unless the same $20,000 and 200-transaction test is met (IR-2026-03). Backup withholding is tax a payer must hold back, at 24%, when it lacks a correct taxpayer ID number.

What to do with a 1099-K

1. Compare the form with your own records. The 1099-K shows gross payments, which may include platform fees, refunds or shipping you passed through.
2. If the payments came from a business or side gig, report them on Schedule C and deduct your business expenses. Our gig workers and freelancers guide explains self-employment tax and quarterly payments.
3. If you sold personal items at a loss, you generally don't owe tax on those sales, but keep proof of what you paid.
4. If the form is wrong, ask the issuer for a corrected form, and keep records of the error.

If income on a 1099-K is left off your return, the IRS's matching program may send a CP2501 or a CP2000 proposing extra tax. Both can be answered with records.

IRSV.com is an independent guide and is not affiliated with the IRS. This page is general information, not tax or legal advice. Rules change; confirm details on IRS.gov or with a tax professional. Found an error? Tell us.