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1099-K · In the News

The 1099-K Threshold Just Reverted to $20,000 — Why "No Form" Still Doesn't Mean "No Tax"

5 min read · By Jonathan C. Do, Esq. · August 2026

If you sell on eBay, drive for a rideshare app, rent out a room, or run a side business through Venmo, PayPal, or Etsy, the rules on the Form 1099-K you receive just changed again. In October 2025 the IRS confirmed that the reporting threshold has jumped back up to $20,000 in payments and more than 200 transactions. That sounds like good news — fewer forms in the mail — but it hides a trap that lands people in IRS notices every year.

What actually changed

Form 1099-K is the information return that payment apps and online marketplaces — what the IRS calls "third party settlement organizations" — send to report money you received for goods and services. For years the threshold sat at $20,000 and 200 transactions. The American Rescue Plan Act of 2021 slashed it toward $600 with no transaction minimum, and there was a planned phase-in of $2,500 for 2025 on the way down.

The One Big Beautiful Bill (OBBB) reversed course. In IR-2025-107 and Fact Sheet 2025-08, issued October 23, 2025, the IRS confirmed the law retroactively reinstated the pre-2021 threshold: a payment platform is not required to send you a 1099-K unless your gross payments for goods or services exceed $20,000 and the number of transactions exceeds 200.

The trap: less paper, same tax

Here is the part that trips people up. The 1099-K is only a reporting form. It does not decide what is taxable. As the IRS states plainly, income you earn from selling goods or services is taxable whether or not you receive a 1099-K.

So a reseller who cleared $12,000 across 150 sales won't get a form this year — but that $12,000 of profit is still reportable income. Skip it, and you've created a gap between what you actually earned and what your return shows. That mismatch is exactly the kind of thing the IRS is built to catch.

Why San Jose sellers and gig workers should still be careful

The IRS cross-checks the income on your return against the information returns it receives from banks, employers, and payment processors. Even under the higher threshold, plenty of activity still generates paperwork the IRS sees:

• Rideshare and delivery drivers typically receive a 1099-NEC or 1099-K from the platform regardless of these changes.
• High-volume resellers and Etsy shops that clear $20,000 and 200 transactions will still get a 1099-K.
• Anyone who receives a form needs their return to match it. An unreported 1099-K is a classic trigger for a CP-2000 underreporting notice.

What to do this year

1. Keep your own records — don't rely on the form.

Track your gross receipts and your costs (the item's original price, platform fees, shipping, mileage) yourself. Your obligation to report doesn't disappear just because a form didn't arrive.

2. Separate personal from business.

Money from friends splitting dinner or repaying a loan isn't taxable income. Selling a personal item at a loss generally isn't either. Keeping personal transfers out of your business accounts makes that far easier to prove if the IRS asks.

3. If a 1099-K looks wrong, act before you file.

If a form overstates your income — say it includes reimbursed expenses or personal transfers — contact the issuer for a correction. Don't just ignore it; the IRS already has a copy.

4. Already got a notice? Respond on time.

If a CP-2000 or examination letter arrives claiming you underreported, the deadline on it is real. A documented, organized response is the difference between a quick fix and a full assessment with penalties and interest.

About the author: Jonathan C. Do is a tax attorney with 25+ years representing businesses and individuals in IRS audits, appeals, and U.S. Tax Court matters. He practices at Tax Resolution Center LLC in San Jose, CA.