The IRS has lowered the threshold for receiving a 1099-K tax form from $20,000 to $5,000 starting this year. This means more people will receive these forms, even if they’re not self-employed.
According to Mark Steber, senior vice president and chief tax information officer at Jackson Hewitt Tax Service, third-party platforms like PayPal, Venmo, and CashApp send 1099-Ks when users make payments exceeding the new threshold. This change affects those who receive payments through these platforms, including freelancers, gig workers, and individuals selling items online.
The lower threshold applies per platform, not across multiple platforms. For example, if you use PayPal to earn $5,000 but Venmo is not involved, you’ll still only get a 1099-K from PayPal.
Zelle is exempt from this rule, as it doesn’t consider itself a third-party platform. However, receiving payments through Zelle can still be taxable.
Mark Steber emphasizes that even small gains from side hustles or selling items online are subject to taxation. Additionally, if you receive gifts or payments on platforms like PayPal, they’re not taxable and won’t trigger a 1099-K.
It’s essential to note that ignoring or refusing a 1099-K can lead to issues with the IRS. If you receive one, it’s crucial to fill out any necessary paperwork correctly to avoid complications.
Source: https://www.marketplace.org/2025/01/13/so-you-receive-a-1099-k-tax-form-this-year-heres-what-to-know