What is a form 1099-K and who receives it?

If you get paid through a third-party app, you may find an IRS Form 1099-K in your mailbox.

Previously, only self-employed workers who netted at least $20,000 through Venmo, PayPal, CashApp, Stripe or similar platforms received the form, which is used to report income from payment apps, online marketplaces and gift cards.

The IRS has begun to implement new reporting requirements; however, and for 2025 tax returns (filed in 2026), the threshold is just $2,500. So, if you earned at least that much via a payment app, you should receive a 1099-K.  

For 2026 tax returns (filed in 2027), the limit will drop to just $600.

IRS Form 1099-K is for transactions made through peer-to-peer payment apps (like Venom or PayPal) and online marketplaces (like eBay or StubHub). 

Funds received for selling goods, providing services or renting property have always needed to be reported to the IRS, regardless of the amount and regardless of whether you received a 1099-K.  The only difference is that platforms are now required to send eligible business account holders — or anyone using a personal account for business transactions — the form if they earned more than $2,500 in 2025.

“A lot of people think this change is some new tax grab and that someone is trying to get the little guy,” said Mark Steber, chief tax information officer for Jackson Hewitt.  “The reality is, if you've had self-employment or side-gig income, that’s had to go on your tax return since 1913.”

In 2021, Congress lowered the threshold for reporting income on payment apps from $20,000 and 200 transactions annually to $600 for a single transaction. Implementation is being phased in over three years. 

• Tax Year 2024:  $5,000 minimum
• Tax Year 2025:  $2,500 minimum
• Tax Year 2026:  $600 minimum

Some states have lowered the reporting requirements for a 1099-K even further, which can have implications for your state return: Maryland, Massachusetts, Vermont, Virginia and Washington, D.C., have already moved the threshold to $600, for example.

Be sure to check with your state revenue department to see if you should expect a form. 

If you were paid $2,500 or more for sales or services through third-party apps in 2025, the platforms are required by law to make ta form available via email, mail or download by January 31, 2026. 

With this year’s lower threshold, far more people with side hustles, home businesses and other gigs will be getting 1099-Ks.

That massive uptick is one reason the IRS decided to phase in the new guidelines, rather than jump right to the $600 limit. The agency expects taxpayers will need more time to familiarize themselves with the form and the apps will need more time to separate business from personal transactions..

According to a 2023 Government Accountability Office report, fully implementing the $600 threshold in 2027 will result in an additional 30 million Forms 1099-K issued annually.

According to the IRS’s Taxpayer Advocate Service, third-party payment networks that may send you a 1099-K include:

• Peer-to-peer payment platforms like PayPal and Venmo
• Ride-hailing apps like Uber and Lyft
• Craft marketplaces like Etsy 
• Crowdfunding platforms like Kickstarter and GoFundMe
• Freelance marketplaces like Fiverr or Upwork
• Online marketplaces like eBay or Shopify
• Ticket exchange/resale sites like Ticketmaster and StubHub.

Venmo, PayPal and Cash App have set up pages to answer questions about Form 1099-K. Internally, all three are using new algorithms to differentiate payments for work and services from those made between friends. 

One popular payment service that’s exempt from the 1099-K requirement, however, is Zelle, which directly connects accounts from major banks like Bank of America and Wells Fargo.

“Zelle has put a pretty big stake in the ground, saying that they are not a third-party platform because they do not take possession of money,” according to Steber. “They merely move money in and out of accounts.”

Business income received through Zelle still needs to be reported to the IRS, he added. It just won’t trigger a 1099-K. 

For the 2025 tax year, you’ll receive a 1099-K if you earned at least $2,500 through at least one app or platform. If you used multiple apps, you’ll receive multiple 1099-Ks.

You should report this income on your 1040 Schedule C, Profit or Loss From Business. Enter the total from your 1099-Ks in the income section, along with any other self-employment or business income.

If you receive regular income through PayPal or Venmo, experts recommend opening a separate business account on the app to make it easier to keep funds separate, regardless of what the IRS does. 

Keep in mind that the system isn’t perfect: You may still be sent a 1099-K for money given to you as a gift or for other non-business reasons. If you receive the form incorrectly, you can ask the provider for an amended 1099-K with your explanation of what is wrong.

You can also just enter the correct amount on your 1040’s Schedule 1. 

If you believe a payment listed on a 1099-K doesn’t reflect a true taxable gain — if it was a personal item sold at a loss, for example — gather receipts and other documentation to make your case.   

What you can’t do is ignore it, because the IRS got a copy, too, and will want to know what’s going on. 

If you’re a gig worker, self-employed or a small business owner, this can feel like another layer of complexity. But, you may be able to deduct travel expenses, home office costs and more to offset that liability. 

It’s best to work with a tax professional or opt for a reliable tax-prep software company’s self-employed tier to be safe. H&R Block and TaxAct are among CNBC Select's top picks for best tax software for small businesses.

If your business grows large enough, forming an LLC and filing as an S Corp may be a worthwhile investment. 

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Mark Steber, chief tax information officer for Jackson Hewitt.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every tax article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of tax products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties and we pride ourselves on our journalistic standards and ethics.

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