Tax Law Center Blog

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.