The Internal Revenue Service on Oct. 23 issued a fact sheet confirming that the higher reporting threshold for Form 1099-K has been restored under the One Big Beautiful Bill Act, reversing changes made during the Biden administration.
Form 1099-K applies to individuals who earn money through gig work or sell goods online. Third-party settlement organizations (TPSOs)—including platforms such as Amazon, eBay, PayPal, and Venmo – must send copies of the form to both the IRS and taxpayers, detailing the total payments received for goods and services.
Return to the Pre-2021 Standard
Before 2021, TPSOs were required to issue a Form 1099-K only if a seller received more than $20,000 and conducted at least 200 transactions during the year.
The 2021 American Rescue Plan Act lowered that threshold to $600, triggering widespread criticism from taxpayers and digital-payment platforms who warned the rule would swamp casual sellers with unnecessary paperwork.
The IRS initially attempted to phase in the lower limit—proposing $5,000 for 2024, $2,500 for 2025, and $600 from 2026 onward—but the One Big Beautiful Bill Act, signed by President Donald Trump on July 4, permanently repealed those reductions.
As a result, TPSOs are again only required to issue Form 1099-K if both of the following are true:
-
The gross payments to a payee exceed $20,000, and
-
The number of transactions exceeds 200.
The IRS noted that some states maintain lower thresholds that remain in effect locally.
Income Still Taxable, With or Without a Form 1099-K
The IRS emphasized that the reporting threshold affects only who receives the form, not what is taxable.
“All income, no matter the amount, is taxable unless the tax law says it isn’t—even if you don’t get a Form 1099-K,” the agency said. That includes cash, property, or services received in exchange for goods or labor.
|
Tax Year |
Law / Regulation |
Reporting Threshold |
Notes |
|---|---|---|---|
| Pre-2021 | Original IRS Rule | > $20,000 AND > 200 transactions | Long-standing standard for third-party payment networks. |
| 2021 – 2023 | American Rescue Plan Act (Biden admin.) | >$600 (single transaction) | Intended to expand reporting to casual sellers; widely criticized. |
| 2024 (proposed phase-in) | IRS transitional guidance | >$5,000 | Never fully implemented. |
| 2025 (proposed phase-in) | IRS transitional guidance | >$2,500 | Also suspended pending legislation. |
| 2026 (onward under ARP) | Planned final stage (now repealed) | >$600 | Would have applied to nearly all online sellers. |
| July 4 2025 – present | One Big Beautiful Bill Act (Trump admin.) | > $20,000 AND > 200 transactions | Restores pre-2021 rule; overrides ARP thresholds. |
The Coalition for 1099-K Fairness – representing payment platforms and small-business advocates – praised the rollback. The group argued that the $600 rule “threatened to overwhelm small businesses and individuals utilizing payment apps with confusing tax forms and expose millions of transactions to unnecessary scrutiny.”
Reinstating the pre-existing standard, it said, “brings clarity and consistency back to hardworking Americans and reduces administrative waste for both taxpayers and the IRS.”
The fact sheet reiterates that personal transfers, such as gifts, reimbursements, or shared expenses, should not trigger Form 1099-K reporting.
Examples include splitting the cost of a meal, receiving birthday money, or getting repaid by a roommate for rent or utilities. Users are encouraged to label these as “non-business” transactions within payment apps when possible.
If You Receive a Form 1099-K in Error
Taxpayers who receive a Form 1099-K in error should contact the issuer (whose details appear in the upper-left “Filer” section of the form) and request a corrected version.
The IRS advises keeping the original form and any correspondence for records and filing a return on time even if a corrected form cannot be obtained before the filing deadline.
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