The IRS Adjusts Reporting Thresholds—Here’s How It Affects You

Tax season is here, and if you received a Form 1099-K, you’re not alone. Many taxpayers will be getting this form for the first time as part of the IRS’s effort to track income from third-party payment platforms like PayPal, Venmo, eBay, Etsy, and Cash App.

Initially, the IRS planned to lower the 1099-K reporting threshold to $600, but they delayed that change. For the 2024 tax year, the threshold is set at $5,000—but expect reductions to $2,500 in 2025 and $600 in 2026. If you’ve received payments over $5,000 for goods or services through these platforms, you’ll receive a 1099-K form that is also reported to the IRS.

What is a 1099-K?

Form 1099-K is an IRS information return. It reports gross payments received through third-party platforms for goods or services. If you received over $5,000 in payments from one of these platforms in 2024, the IRS knows about it. That means ignoring it isn’t an option—you must report the income correctly on your tax return.

Even if you earned less than $5,000, some platforms, like eBay and PayPal, may still issue a 1099-K. If you use multiple platforms, you might receive more than one of these forms.

Does a 1099-K Mean You Owe Taxes?

Not necessarily! Receiving a 1099-K doesn’t automatically mean you owe taxes—it depends on how the income was earned.

Here’s how to determine whether you need to pay taxes on the amount reported:

1. You Sold Personal Items

1. If you sold personal belongings (e.g., used electronics, clothes, furniture) for less than what you originally paid, that income is not taxable—but it still appears on your 1099-K.
2. You cannot deduct personal losses, but you can report $0 taxable income on your return to avoid paying taxes on it.
3. If you sold an item for more than you paid, the profit is taxable and should be reported.

2. You Sold Goods or Provided Services

1. If you operate a side hustle, freelance business, or sell goods on platforms like Etsy or eBay, the IRS considers this taxable income.
2. The good news? You can deduct related expenses (e.g., materials, transaction fees, shipping costs) to lower your taxable income.

Preparing for the 2025 Tax Season

With lower 1099-K reporting thresholds coming in 2025 and 2026, more taxpayers will receive these forms in the future. Here’s how to stay ahead:

1. Track Your Income – Keep records of all payments received through third-party platforms.
2. List Expected 1099-Ks – If you use multiple platforms, make sure you receive all expected tax forms before filing.
3. Check for Errors – Review each 1099-K carefully for mistakes before reporting it to the IRS.
4. Understand Your Tax Obligations – Not all payments are taxable, so consult a tax professional if you’re unsure.

Important Tax Deadlines

1. April 15, 2025 – Deadline to file your individual tax return and pay any taxes owed.
2. April 15, 2025 – Last day to request a six-month extension (Note: an extension gives you more time to file, not more time to pay).

The IRS recommends electronic filing and direct deposit for refunds to ensure faster processing and better security.

Final Thoughts

Filing taxes with a 1099-K can be confusing, especially if you’re new to it. Keeping detailed records and understanding what’s taxable can help you avoid IRS issues. If you’re unsure about reporting your 1099-K income, consulting a tax professional can help you stay compliant and maximize deductions.

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