Last checked: November 2026. This covers Forms 1099-K for payments received in 2026, which arrive in early 2027.
For 2026, a payment app or online marketplace has to send you a Form 1099-K only if you received more than $20,000 for goods or services through that platform and had more than 200 transactions there. Platforms can still send one below those numbers, and card processors report any amount. Either way, the form doesn't decide what you owe. You report your actual income even if no form shows up, and you can zero out amounts that aren't income.
The rule in one line: the $20,000 / 200-transaction test decides whether a payment app must send a form. It doesn't decide if your income is taxable.
Where the $20,000 and 200-transaction rule came from
The 2025 budget law (Public Law 119-21, which the IRS calls the One, Big, Beautiful Bill) undid the lower thresholds that had been scheduled to phase in. According to the IRS's Form 1099-K FAQs (fact sheet FS-2025-08, October 2025), the law "retroactively reinstated" the earlier rule. Under it, a third party settlement organization (the IRS term for payment apps and online marketplaces) isn't required to file a 1099-K unless your payments for goods or services exceed $20,000 and the number of transactions exceeds 200.
Under the older American Rescue Plan Act rule, the threshold was more than $600 with no transaction minimum. If you remember hearing that number, it no longer applies to payment apps.
The IRS "Understanding your Form 1099-K" page spells out three points that cause most of the confusion:
- The test is per platform. If you sell on two marketplaces, each one looks only at its own payments to you, so you could get more than one form, or none.
- Both parts must be met: more than $20,000 and more than 200 transactions.
- The rule covers payment apps and marketplaces. If customers pay you directly by credit, debit, or gift card, your card processor sends a 1099-K "no matter how many payments you got or how much they were for."
Platforms must send your copy by January 31, according to the IRS. Find the case below that matches your situation.
Case 1: You sold over $20,000 in more than 200 sales, and the form arrived
What happened: Say you resell vintage clothing on one marketplace. Your 2026 Form 1099-K shows $24,600 in Box 1a across 260 sales. The form came because you crossed both lines.
What the form means: Box 1a is a gross number. The IRS's What to do with Form 1099-K page says it isn't adjusted for fees, credits, refunds, shipping, cash equivalents, or discounts. Those items aren't taxable income, and you can subtract them using your records. The gross amount also doesn't reflect what you paid for the items you sold.
What to do: The IRS says self-employed sellers, gig workers, and freelancers report this income on Schedule C. Here's a hypothetical reseller's year:
- 1099-K Box 1a: $24,600
- Minus refunds to buyers: $600, leaving $24,000
- Minus cost of the inventory sold: $9,800, leaving $14,200
- Minus marketplace fees: $2,100, leaving $12,100
- Minus shipping labels the seller paid: $1,400, leaving $10,700 net profit
That $10,700, not $24,600, is what income tax and self-employment tax are figured on. Using the 15.3% self-employment tax rate on 92.35% of net earnings from the IRS self-employment tax page and the 2026 Form 1040-ES worksheet, self-employment tax on $10,700 works out to about $1,512 ($10,700 × 92.35% × 15.3%). Income tax depends on the rest of your return.
Case 2: You sold less than that, but got a 1099-K anyway
What happened: You sold $3,200 of crafts through a marketplace in 85 orders, and a 1099-K arrived.
What the form means: According to the IRS FAQs, the threshold is a reporting requirement for platforms, but a platform "may still send a Form 1099-K" for lower amounts. The IRS also notes that your state may have a lower reporting threshold, which can trigger a form even when you're under the federal one.
What to do: Check the form against your records. If the amounts are right, report the income the same way you would with any 1099-K. Receiving the form below the threshold isn't an error, and it doesn't change your tax.
Case 3: You didn't get a form at all
What happened: You made $26,000 doing furniture repair, paid through a payment app, but in only 140 transactions. No form came.
What the form means: You passed the dollar test but not the transaction test, so the app wasn't required to send one. That's all it means.
What to do: Report the income anyway. The IRS FAQs say the reporting threshold "doesn't affect whether payments are taxable or whether a tax return must be filed," and income includes cash and other payments not reported on any form. Your own sales reports from the app, bank deposits, and invoices are your records.
A related situation: if you never gave the platform your Social Security number, it may have taken backup withholding from your payouts. The IRS says that tax shows in Box 4 of the 1099-K and should be reported on your return so you get credit for it.
Case 4: The form includes personal things you sold at a loss
What happened: You cleared out a storage unit. Through one marketplace you sold a sofa you bought for $1,200 for $400, and a road bike you bought for $250 for $300. Your form shows $700.
What the form means: Selling a personal item for less than you paid creates no taxable income. According to the IRS, a loss on a personal item can't be deducted either. A gain on a personal item is taxable.
What to do: Split the sales, because the IRS says gains and losses on personal items are reported separately and a loss can't offset a gain.
- Sofa: $400 − $1,200 = $800 loss. Following the IRS page, you can report the $400 in the entry space at the top of Schedule 1 (Form 1040) so it isn't taxed, or report it on Form 8949.
- Bike: $300 − $250 = $50 gain. The IRS says a gain on a personal item goes on Form 8949 and Schedule D.
If you can't remember what you paid, the IRS FAQs suggest looking for old bank or card statements or asking the seller.
Case 5: The form counts money that wasn't a sale
What happened: Your roommate paid you their share of rent through an app, and it showed up on a 1099-K.
What the form means: According to the IRS, gifts and repayments from friends and family aren't payments for goods or services, shouldn't be on a 1099-K, and aren't taxable income.
What to do: The IRS lists these steps:
- Contact the issuer listed as "Filer" in the top left corner of the form and ask for a corrected 1099-K showing zero. The IRS can't correct it for you.
- Keep the original form and your correspondence.
- Don't hold your return. If no corrected form arrives in time, report the incorrect amount in the entry space at the top of Schedule 1 so it isn't taxed.
Going forward, the IRS suggests marking personal payments as non-business in the app when you can.
Case 6: Customers paid you by card directly
What happened: You run a weekend food stand and take cards through a card reader.
What the form means: The $20,000 / 200 test doesn't apply here. The IRS FAQs say there's no minimum for payment card transactions. Even a tiny amount gets reported.
What to do: Treat it like Case 1. Start with the gross amount, subtract refunds and business costs from your records, and report the profit on Schedule C. If you also had cash sales, those count too.
If you got more than one 1099-K
Because the test runs platform by platform, sellers who use several apps often get a mix: one form from the marketplace they used most, maybe one from a card processor, and none from the others. According to the IRS FAQs, you use all the forms together with your own records to work out your actual income. Don't add the forms up and stop there, and don't skip income from a platform that sent nothing.
If several forms include personal items sold at a loss, or payments that never should have been reported, the IRS FAQs say you can combine those amounts into one entry in the space at the top of Schedule 1 (Form 1040) rather than listing each form separately.
Records to pull together before you file
The IRS says your records may include reports from payment apps or online marketplaces, payment card receipts, and merchant statements. For a 2026 return, a practical list looks like this:
- Each platform's annual sales or earnings report, which usually breaks out refunds and fees that Box 1a doesn't
- Receipts or invoices for inventory and supplies
- Shipping label charges you paid
- For personal items, anything showing what you originally paid; the IRS points to Publication 551 on figuring basis
- Notes on any personal payments (rent splits, gifts) that landed in a business account or on a form
- Any letters or emails with a platform about a corrected form
Keeping business and personal payments in separate accounts during the year makes all of this easier, which is something the IRS FAQs also recommend.
FAQ
My 1099-K is for less than $20,000. Can I just ignore it?
No. Platforms send a copy of each 1099-K to the IRS, so your return should account for it. Report the business income it reflects. If it covers personal items sold at a loss or payments that weren't sales, show it and zero it out the way the IRS describes. Owing nothing on a form isn't the same as leaving it off.
Will I get a 1099-K for money friends and family send me on payment apps?
You shouldn't. The IRS says gifts and reimbursements aren't payments for goods or services and shouldn't be reported on Form 1099-K. Each app has its own way of sorting payments, so tag personal payments correctly when you send or receive them. If one shows up anyway, ask the issuer for a corrected form.
Does the $20,000 threshold apply to my state taxes too?
Not necessarily. The IRS notes that some states set lower 1099-K reporting thresholds, so a platform may send you a form for state purposes even when the federal test isn't met. Check your state revenue department's website for its current rule. Your state income tax is based on your income, not on whether a form was sent.
This article is general information, not legal or tax advice. The IRS decides how your income is taxed; check with them or a qualified tax professional for your situation. See our Disclaimer and read about AidPlain. If you sell regularly, you may also want to read our guide to quarterly estimated tax.
