Getting a 1099-K? Here’s What You Need to Know

If you’re a freelancer or someone who earns income from online sales, you may have heard of the 1099-K. This form plays a crucial role in reporting income for those who receive payments through platforms like PayPal, Venmo, or credit card transactions. Understanding it can save you from tax headaches and help keep your finances in order.

What is a 1099-K?

The 1099-K tax form reports income earned through digital payment platforms and card transactions. If you’re a gig worker, online seller, or use services like Venmo for business purposes, this form helps the IRS track your income.

As of 2025, if you receive $2,500 or more in payments via third-party networks or card transactions, you’ll likely receive a 1099-K. Starting next year, the reporting threshold will drop to $600. This change could impact you if you have a side gig or sell items online.

Why It’s Important

Tax Implications

The income shown on the 1099-K is taxable, so it must be included in your tax return. 

Common Misconceptions

Not all transactions are taxable. For example, personal transfers between friends (like splitting a dinner bill on Venmo) are not considered taxable income. Distinguishing between personal and business payments is essential to avoid unnecessary confusion.

Tips for Handling Your 1099-K

• Review: Make sure the information is correct, especially the amounts. If something doesn’t look right, contact the payment platform for clarification.
• Organize Records: Keep a detailed record of your transactions. This will help you avoid mixing up taxable income with personal transfers.
• Seek Assistance: Don’t hesitate to reach out to a tax professional or use resources like VITA (Volunteer Income Tax Assistance) for free guidance.

IRS 1099-K Resources

• Common 1099-K Situations: Find answers to frequently asked questions about common 1099-K situations including specific scenarios describing how 1099-K relates to dependents, donations through “crowdfunding,” small businesses, and more.

What to do if you receive a Form 1099-K: Explore common questions about what to do after receiving a 1099-K and what to do if you have questions or corrections to a 1099-K. Take Control of Your Finances

By staying organized and understanding your obligations, you can confidently navigate your tax season. If you haven’t already, review your 1099K and create your filing plan. 📝