Tax Law Center Blog

By Parag P. Patel, Esq. | Updated December 12, 2024

Yesterday the IRS announced transition relief for individuals and businesses receiving Form 1099-K, Payment Card and Third-Party Network Transactions, with new reporting thresholds for 2024 and 2025. This pertains to payments from Venmo, Paypal, Stripe and similar payors.

What is Form 1099-K?

Form 1099-K is issued by payment settlement entities to report transactions made via payment cards or third-party networks like online marketplaces. The form provides the total gross payments received by the payee in a calendar year.

• Previously, transactions were reportable only if gross payments exceeded $20,000 and involved more than 200 transactions in a year.
• Starting in 2026, any payments exceeding $600, regardless of the number of transactions, will be reportable.

Transition Period Thresholds

During 2024 and 2025, the IRS has temporarily raised the reporting thresholds:

• 2024: Payments over $5,000 will trigger a Form 1099-K.
• 2025: Payments over $2,500 will trigger a Form 1099-K.

For these years, you will not receive a Form 1099-K unless your total payments exceed the applicable threshold.

What Does This Mean for Recipients?

• Taxable Income: Receipt of a Form 1099-K does not automatically mean the reported amount is taxable. Recipients must determine whether the payments represent income (e.g., business sales) or non-taxable transactions (e.g., personal reimbursements).
• Recordkeeping: Ensure you maintain clear records of all transactions, including business income and personal payments, to verify the accuracy of reported amounts.
• IRS Matching: Even without a Form 1099-K, you are still responsible for reporting all taxable income on your return. The IRS may use other methods to detect unreported income.

Planning for 2026

Beginning in 2026, the $600 threshold will apply, greatly expanding the number of transactions reported. To prepare:

• Track Transactions: Use separate accounts for personal and business transactions to avoid mixing non-taxable payments with taxable income. Consider separate accounts.
• Understand Reporting Requirements: Educate yourself on how the IRS treats various types of income, including payments from online platforms and peer-to-peer apps.
• Seek Professional Advice: If you receive multiple Forms 1099-K or have complex transactions, consult a tax professional to ensure accurate reporting and avoid penalties.

About the Author

Parag P. Patel, Esq. brings over three decades of experience to individuals and businesses facing complex tax problems. Holding advanced degrees from Georgetown University Law Center (J.D.) and New York University School of Law (LL.M. in Tax Law), the nation’s top tax programs, Mr. Patel delivers sophisticated and creative strategies in complicated federal and state audits, penalty abatements, and foreign asset/income reporting. His practice emphasizes international tax matters, specifically foreign financial account reporting (FBAR), voluntary disclosures, and penalty defense.

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