The 1099-K Threshold Is Back to $20,000: What Side Sellers and Payment-App Users Need to Know
The planned $600 reporting threshold for payment apps is gone, and $20,000 is back. Here is what that means for side sellers and app users, what's still taxable without a form and how to handle one if it arrives.
📑 On this page ▼
📐 Figures verified Sep 28, 2026 against Public Law 119-21 (which restored the $20,000 and 200-transaction threshold for payment apps and marketplaces), the IRS's guide to Form 1099-K, Schedule C and Form 1099-NEC. This is general information, not tax advice. How we check numbers →
Payment apps and online marketplaces send a Form 1099-K only when your payments top $20,000 and 200 transactions in a year, after the 2025 tax law scrapped the planned $600 threshold. Card payments to a merchant account have no threshold. Either way, business and side-hustle income is taxable whether or not you get a form; personal reimbursements and gifts aren't income.
Numbers That Matter
| Figure | Amount | Source | Verified |
|---|---|---|---|
| 1099-K from payment apps and marketplaces | Only above $20,000 and 200 transactions in a year | P.L. 119-21 | Sep 28, 2026 |
| What a 1099-K reports | Gross payments for goods and services, not profit; your costs still count | IRS | Sep 28, 2026 |
| Reporting side-business income | Schedule C, whether or not you receive a 1099 | IRS | Sep 28, 2026 |
| Payments from clients who pay you directly | May arrive on Form 1099-NEC instead | IRS | Sep 28, 2026 |
What Changed
For years, payment apps and marketplaces reported your sales only above $20,000 and 200 transactions. A 2021 law would have dropped that to $600, and the IRS phased the change in slowly. Public Law 119-21 restored the $20,000 and 200-transaction threshold, so far fewer casual sellers get a 1099-K. Card payments processed for a business still produce a 1099-K regardless of amount.
What's Taxable, With or Without a Form
| Money you received | Taxable? |
|---|---|
| Sales from a side business or hobby selling | Yes: report income and expenses, typically on Schedule C |
| Selling personal items for less than you paid | No taxable gain, and the loss isn't deductible |
| Selling personal items for more than you paid | Yes, the gain is taxable |
| Splitting a bill, reimbursements, gifts from family | No, these aren't income |
If You Get a 1099-K Anyway
- Check it against your records. Payments sent to you by mistake or that were personal shouldn't be counted as income.
- Report business income on Schedule C and subtract your costs; a 1099-K shows gross payments, not profit.
- Report personal-item sales correctly, showing your cost so a loss isn't mistaken for income.
- Ask the platform to correct a form that includes personal payments.
Worked Example: A Side Seller
- No form: $12,000 of sales across 150 transactions is under both thresholds, so no 1099-K arrives.
- Still taxable: after $4,500 of materials and fees, the $7,500 profit goes on Schedule C, with about $1,060 of self-employment tax and about $900 of income tax in the 12% bracket.
- A garage-sale item: a couch bought for $5,000 and sold for $3,000 is a personal loss, not income, and it isn't deductible.
Self-employment tax uses 15.3% of 92.35% of net profit; income tax uses a single marginal rate for simplicity.
Decision Rules
If this, then that
- If you sell regularly for profit → track income and expenses and file Schedule C, form or no form.
- If you only sell your own used stuff → losses aren't taxable income; keep receipts if you get a form.
- If friends pay you back through an app → mark payments as personal where the app lets you.
- If a 1099-K includes personal money → ask for a correction and document it on your return.
- If your side income is growing → set aside money for self-employment tax.
Mistakes to avoid
- Assuming no 1099-K means no tax.
- Reporting gross payments as profit without subtracting costs.
- Treating bill-splitting or gifts as income.
- Forgetting self-employment tax on side-business profit.
- Ignoring a wrong form instead of getting it corrected.
Related: Form 1099-DA covers crypto reporting; payment app rights covers when a payment goes wrong; 2026 tax changes lists everything new; and side-hustle taxes goes deeper.