What's This New 1099-K I Got?

Updated November 2025 with latest IRS guidance on reporting thresholds under the One Big Beautiful Bill Act (OBBBA)

A lot of folks are surprised to receive a 1099-K form, but don’t worry—it doesn’t automatically mean you’ll pay more in taxes. Let’s dive in and learn more about what this form is all about!

What Is a 1099-K?

The 1099-K pertains to transactions involving Payment Cards and Third Party Network Payments. Essentially, if you utilized a payment processor such as PayPal, Venmo, or several others and received payments exceeding certain thresholds, they are obligated to issue this form to you. However, whether those funds are taxable is a separate matter altogether.

Important Update: New Threshold for 2025

Good news for many taxpayers! The One Big Beautiful Bill Act (OBBBA) retroactively reinstated the pre-2021 reporting thresholds. For 2025 transactions (forms issued in January 2026), third-party settlement organizations are only required to file Form 1099-K if both of the following conditions are met:

• Gross payment transactions exceed $20,000, AND
• The number of transactions exceeds 200

This is a significant change from the lower thresholds discussed in recent years, meaning far fewer people will receive these forms. According to IRS Fact Sheet 2025-08, this higher threshold should reduce confusion and administrative burden for both taxpayers and payment platforms.

Do I Owe Tax On This?

If you’re an individual, you may or may not owe tax. If you sent a friend or family money, and it wasn’t in exchange for goods or services, you probably shouldn’t have gotten the form. You’ll still report it on your taxes, but there’s a spot to indicate the amount that was reported in error, which will negate the tax owed.

Another common example is selling concert or other event tickets. If you made money on selling the tickets (i.e. you bought it for $100 and sold for $200), you owe tax on the $100 of profit. Your 1099-K will show the total amount received - so you’ll need to know how much you spent so that can be offset. If you sold the tickets at a loss (i.e. you bought for $100 and sold for $50), you won’t owe tax - but that $50 will still be included.

If you’re running a business and receive a 1099-K, it’s likely money that you had already planned on paying tax on. You’re responsible for paying tax on all of your sales, minus your expenses - the 1099-K just confirms a portion (or all) of the sales amount.

Summary

To wrap things up, getting a 1099-K shouldn’t be something to fear. With the new higher thresholds for 2025, far fewer people will receive these forms—but if you do get one, just remember that it doesn’t automatically indicate you’ll owe additional taxes. Its main purpose is to ensure transparency and help the IRS match reported income.

If you’re working with a tax professional, make sure to explain what the funds were for, as they can help you navigate the situation properly. Just remember not to overlook it—report it and provide an explanation; otherwise, the IRS may assume the entire amount is taxable!

Key takeaway for 2025: You’ll only receive a Form 1099-K if you had more than $20,000 in gross payments AND more than 200 transactions through payment platforms like PayPal, Venmo, or similar services.