Quick answer: For 2026, payment apps and online marketplaces like PayPal, Venmo, eBay and Etsy only have to send you a Form 1099-K if you received more than $20,000 in payments and had more than 200 transactions for goods or services. The One Big Beautiful Bill Act brought back that higher threshold, replacing the $600 rule. But the threshold only decides who gets a form. Business and side-hustle income is still taxable even if you never get a 1099-K.
The 1099-K rules changed several times in a few years, and many people are confused about what they’ll get in January. Here’s what the law says now, what counts, what doesn’t, and what to do if you get a form you didn’t expect.
Form 1099-K thresholds by year
| Tax year | Payment apps and marketplaces must send a 1099-K when… |
|---|---|
| 2023 and earlier (as enforced) | Over $20,000 and over 200 transactions |
| 2024 and 2025 (IRS transition plan) | Planned $5,000 and $2,500 levels; replaced retroactively by the new law |
| 2026 and later | Over $20,000 and over 200 transactions (both must be met) |
The One Big Beautiful Bill Act (July 2025) restored the $20,000/200 threshold as if the 2021 change to $600 never took effect. See IRS Fact Sheet 2025-08.
Card processors (payment card transactions) have no threshold. If you take credit cards through a merchant account, you may get a 1099-K for any amount.
Some states set lower thresholds for state reporting, so you might still get a 1099-K for a smaller amount. Check your state’s rules.
What to do when tax season comes: step by step
- Check your mail and app inbox in January. Platforms must send 1099-Ks by Jan. 31.
- Compare the form to your records. A 1099-K shows the gross amount, before fees, refunds or shipping.
- Separate personal from business payments. Splitting dinner, rent with roommates or gifts from family are not income.
- Report business income on Schedule C (or the right form), and deduct your costs and platform fees.
- Report personal item sales correctly. Selling your used couch for less than you paid is not taxable, but the IRS wants you to show it on Form 8949 if you got a 1099-K for it.
- Ask the platform to fix errors. If the form is wrong, contact the issuer for a corrected form.
What counts and what doesn’t
| Payment | Counts toward 1099-K? | Taxable? |
|---|---|---|
| Selling handmade crafts on Etsy | Yes | Yes (business income minus costs) |
| Driving or delivering for an app | Yes | Yes |
| Selling your used furniture at a loss | Yes, if marked as goods | Usually no |
| Reselling items for a profit (flipping) | Yes | Yes, on the profit |
| Friends paying you back for dinner | No (if marked friends & family) | No |
| Gifts from family | No | No (for the recipient) |
Made-up examples (for illustration):
Jordan sells vintage clothes on a resale app. In 2026, he has 260 sales totaling $14,500. Because he’s under $20,000, he won’t get a 1099-K. But he bought the clothes for $6,000 and paid $1,800 in fees, so his profit of $6,700 is still taxable income he must report.
Priya sells 230 items worth $23,000, mostly her own old furniture and electronics after a move. She gets a 1099-K. She lists the sales on Form 8949, showing what she originally paid. Because she sold everything for less than she paid, she owes no tax on it.
Also read: Side hustles you can start with no money
What about Forms 1099-NEC and 1099-MISC?
These are separate from the 1099-K. If a business pays you directly (by check, bank transfer or ACH) as a freelancer, it may send a Form 1099-NEC. Under the same 2025 law, the reporting threshold for these forms rises from $600 to $2,000 for payments made in 2026, with inflation adjustments starting after that.
Again, the threshold is about paperwork, not taxes. If you earned $1,500 freelancing, you still owe tax on it even without a form.
Self-employment tax: the part people forget
If you have net self-employment earnings of $400 or more in a year, you generally must file and pay self-employment tax (Social Security and Medicare) of about 15.3% on most of that profit. That’s on top of income tax.
Set aside 25% to 30% of side-hustle profit for taxes, and consider making quarterly estimated payments (Form 1040-ES) to avoid penalties. The next estimated tax due date for 2026 income is Jan. 15, 2027.
How to avoid problems with personal payments
- Tag personal payments as “friends and family” in PayPal or Venmo, not as goods and services. (Only for real personal payments; don’t do this for sales, which removes buyer protection and can break platform rules.)
- Use a separate account for side-hustle money. It makes records much easier.
- Keep receipts for items you buy to resell and for personal items you sell, so you can show your cost.
- Download yearly reports from each platform in January.
Common mistakes
- Thinking “no form, no tax.” All business income is taxable, form or not.
- Reporting the gross 1099-K amount as profit. Subtract fees, refunds, shipping and the cost of goods.
- Ignoring a 1099-K for personal sales. The IRS gets a copy. Report it and show it isn’t income.
- Waiting until April to plan. Big side incomes may need estimated payments during the year.
- Not checking state rules. Some states may still require lower-threshold 1099-K reporting.
What if you get a 1099-K by mistake?
If the form includes personal payments that weren’t sales, ask the platform for a corrected form first. If you can’t get one, the IRS explains how to report the amount and then back it out on your return so you don’t pay tax on money that isn’t income. Keep notes and records showing why.
Key dates for the 2026 tax year
| Date | What happens |
|---|---|
| Jan. 15, 2027 | Fourth-quarter 2026 estimated tax payment due |
| Jan. 31, 2027 (next business day if a weekend) | Platforms send 1099-K and 1099-NEC forms |
| April 15, 2027 | Usual deadline to file 2026 returns (unless extended) |
Deductions sellers and gig workers often miss
If your side hustle is a business, you can usually deduct ordinary and necessary costs on Schedule C. Common ones include:
- Platform and payment processing fees (often already shown in your yearly app report)
- Cost of goods sold for items you bought to resell
- Shipping supplies and postage
- Business mileage for delivery and rideshare (the IRS sets a standard mileage rate each year)
- A share of your phone and internet used for the business
- Home office, if you use part of your home regularly and only for business
Good records are what make these deductions stick. A simple spreadsheet updated weekly can save you hundreds of dollars at tax time.
Hobby or business?
If you sell now and then for fun, the IRS may see it as a hobby. Hobby income is still taxable, but you can’t deduct hobby expenses under current law. If you run it like a business, aiming for profit and keeping records, you can deduct costs on Schedule C. The IRS looks at things like how you run the activity, the time you spend and whether you’ve made a profit in some years. When in doubt, ask a tax pro.
One more tip: if you sell through several apps, add up all of them. Each platform uses its own $20,000/200 count, so you may get no forms at all even if your combined sales are well over $20,000. Your total income still has to be reported.
Recommended products
Tools that make side-hustle taxes easier.
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FAQ
What is the 1099-K threshold for 2026?
Over $20,000 in payments and over 200 transactions in the year, for payment apps and online marketplaces.
Will Venmo send me a 1099-K for $600?
Not under federal rules for 2026. The $600 threshold was repealed. Some states may set their own lower limits.
Do I pay tax on money I get through PayPal?
Only if it’s income, such as sales for profit or payment for services. Personal reimbursements and gifts aren’t taxable.
Is selling used stuff online taxable?
Not if you sell it for less than you paid. If you sell for a profit, the gain is taxable.
Do I need to report income if I don’t get a 1099?
Yes. All taxable income must be reported, whether or not you get a form.
Bottom line
For 2026, you’ll only get a 1099-K from a payment app if you top $20,000 and 200 transactions. That’s good news for casual sellers. But side-hustle profit is still taxable, and self-employment tax starts at $400 in net earnings. Keep records, separate business money, and set aside money for taxes.
Last reviewed: Nov. 12, 2026. This is general information, not tax advice.
Sources: IRS: Understanding your Form 1099-K, IRS Fact Sheet 2025-08, IRS: Self-employment tax, CPA Practice Advisor, RSM.
Featured image: Paying with a smartphone. Photo: Richard Tanzer Fotografie / VeroPay, Wikimedia Commons, CC BY-SA 3.0; edited by Nexgen Headlines.
