What Is a 1099-K?

What Is a 1099-K Used For?

Debit and credit card processors and third-party payment services such as Venmo, Cash App and PayPal use Form 1099-K to report business transactions. If you're a solopreneur, contractor or other self-employed professional, you'll receive a 1099-K from each service that processed payments reaching the IRS threshold (more on that below) for the current tax year.

Full-time employees who earn only W-2 income won't receive 1099-Ks to file with their tax return. However, if you have a side gig in addition to being traditionally employed, you may receive one or more for your side business.

A 1099-K may also be issued if you sell personal belongings—such as a car you're replacing for a newer model or the treadmill that's been collecting dust in your basement for years—if the buyer pays you using a method (like PayPal) that requires the payment service to issue a 1099-K.

Myth buster: Personal transactions like using your Venmo account to collect money from the parents in your child's second-grade class for the teacher's end-of-year gift aren't subject to the same rules and shouldn't appear on a 1099-K.

Compare tax preparation services

You could save time preparing your taxes, and get assistance maximizing your refund. Plus, many services provide audit assistance to give you confidence when you file.

What Are the New 1099-K Thresholds?

Under federal law, all credit and debit card payments you receive from clients must be reported on Form 1099-K, regardless of the transaction amount or number of payments you receive. Additionally, payment apps like Venmo, CashApp or PayPal and online marketplaces must issue a 1099-K if you receive more than $20,000 in payments and 200 transactions during the year.

The $20,000 and 200 transaction limit represents a change from tax years 2023 and 2024, when third-party settlement organizations (TPSOs) had to issue 1099-Ks to anyone who received payments of $600 or more.

Tip: States may have lower reporting thresholds for TPSOs than the federal government. If you live in a state with a lower threshold, you may receive a 1099-K even if you received less than $20,000 and had fewer than 200 transactions.

When Are 1099-K Forms Sent?

All 1099-K forms must be issued by January 31 for the previous tax year. For example, companies issuing 1099-Ks for the 2025 tax year must send them by January 31, 2026. Copies must be sent to you and the IRS.

Do I Need to Pay Taxes on 1099-K Income?

It depends. The answer is often yes, but there are some exceptions. Here's a quick overview of what to expect.

When You Need to Pay Taxes on 1099-K Income

Income reported on a 1099-K falls into one of two general categories: business or personal. All legitimate business income is subject to federal and state taxes.

If you're self-employed, 1099-K forms aren't a substitute for keeping your own records. Ultimately, it's up to you to accurately report all your income to the IRS, whether it appears on a 1099-K or not.

If you receive a 1099-K because you sold some of your personal belongings, you're responsible for paying taxes on the income if you profited from the sale.

When You Don't Need to Pay on 1099-K Income

Income that appears on a 1099-K form isn't always taxable. Here are some scenarios when you may not need to pay taxes.

• A payment for which you issued a refund is listed.
• You're not the owner of the business account named.
• The income reported is inaccurate.
• You sold a personal item for less than what you paid for it.

Learn more: What Is Taxable Income?

What to Do if Your 1099-K Is Incorrect

If you receive a 1099-K with inaccurate information, contact the payment service that filed it and request a corrected form. Be sure to keep all correspondence between you and the company and maintain a copy of the corrected 1099-K for your records. If you don't receive an updated form before your taxes are due, you should still file on time. You can report the error on your tax return so it doesn't affect your taxable income.

How to Report 1099-K Income on Your Taxes

The way you report 1099-K income on your taxes depends on the type of income you receive and how your business is set up.

Business Income

If you're self-employed or have a side hustle in addition to your "regular" job and file your taxes as a sole proprietor, use Schedule C to report your 1099-K income. Partners in a business partnership should use Schedule E, and if your business entity is a corporation, you have two options: S-corporations should use Form 1120-S, and if you don't have an S-corporation, use Form 1120.

If you own an investment property or rent out part of your home, you can report rental income on Schedule E or Schedule C.

Tip: Income reported on 1099-Ks may not represent your total annual revenue. You're responsible for reporting all your income, including payments received via cash, check and other methods that don't appear on a 1099-K and paying the appropriate taxes.

Sale of Personal Items

If you receive a 1099-K after selling a personal item, reporting requirements vary based on whether you sold the item for a profit or loss. You can report items sold at a loss on Schedule 1 or Form 8949. Report items sold for a profit on Schedule D and Form 8949.

Learn more: How to Report 1099-K Income

Frequently Asked Questions

The Bottom Line

Receiving a 1099-K form shouldn't affect your tax bill, but it can provide a layer of accountability to your tax preparation process. If reporting your income and doing your taxes seems more complicated than in years past, you might want to work with a tax professional. They can help you calculate your taxable income accurately, identify legitimate deduction opportunities, reconcile your profits and losses and stay on the right side of the IRS.