1099-K Thresholds for 2024-2026: A Simple Guide for Online Sellers

Cartoon-style illustration of an online seller at a laptop with shipping boxes and a tax document labeled 1099-K, with bold text “1099-K Changes 2024-2026” and subtitle “A Simple Guide for Online Sellers.”

If you sell on platforms like Etsy, eBay, PayPal, or even resell tickets online, you’ve probably heard about Form 1099-K. The rules for who gets this form have been changing, causing a lot of confusion for casual sellers and small business owners.

This guide breaks down everything you need to know about the new 1099-K reporting thresholds, what to do when you get a form, and how to report your income correctly.

The Bottom Line: New 1099-K Thresholds at a Glance

Confused by the numbers? Here are the key thresholds for online marketplaces and payment apps (also known as Third-Party Settlement Organizations or TPSOs):

  • For Tax Year 2024: You will receive a Form 1099-K if your gross payments exceed $5,000.
  • For Tax Year 2025: The threshold drops to $2,500.
  • For Tax Year 2026 and beyond: The threshold is planned to be $600.

Remember, this is a phased-in approach by the IRS to help taxpayers adjust. And one crucial rule never changes: you must report all your income, whether you receive a 1099-K or not.

From $20,000 to $600: A Timeline of the Changes

The 1099-K threshold has seen several delays and updates. Here’s a simplified timeline to help you keep track:

Tax Year TPSO Reporting Threshold What This Means for You
2011–2023 $20,000 AND 200+ transactions Most casual sellers didn't receive a 1099-K unless they were high-volume sellers.
2024 $5,000 Many more sellers on platforms like Etsy, eBay, and PayPal will now receive a 1099-K.
2025 $2,500 The threshold continues to decrease, capturing even more sellers.
2026+ $600 This is the final, much lower threshold that will become the permanent standard.
Any Year No Threshold (for Payment Cards) If you accept credit or debit card payments directly (not through a platform like PayPal), there is no minimum threshold. All transactions are reportable.

Understanding Your Form 1099-K: What the Numbers Mean

When you receive a 1099-K, the amount in Box 1a can be surprising. Here’s why:

  • It’s a Gross Amount: The form reports your total gross payments. This is the total amount your buyers paid before any deductions for platform fees, shipping costs, refunds you issued, or sales tax collected by the marketplace. Don’t worry—you’ll deduct these expenses on your tax return.
  • TPSO vs. Payment Card:
    • A Third-Party Settlement Organization (TPSO) is an online marketplace or payment app (Etsy, eBay, PayPal, Venmo). They use the thresholds listed above.
    • A Payment Card Processor handles direct credit/debit card transactions. They report all payments, with no minimum threshold.

Common Scenarios: What to Do If...

Here’s a quick playbook for handling common 1099-K situations.

You sold personal items at a loss but still got a 1099-K.

This is common when clearing out your closet or garage. While you can't deduct the loss, you also don't owe tax on it. The IRS gives you two ways to show this:

  1. Schedule 1 (Form 1040): Report the 1099-K amount on one line and then make an offsetting entry on another line to zero it out.
  2. Form 8949 / Schedule D: Report the sale with your cost basis (what you originally paid) to show a $0 gain.

Keep records of your original purchase price to prove the loss if needed.

Your 1099-K is wrong or a duplicate.

Contact the issuer immediately (their information is in the "FILER" section of the form). Politely request a corrected form. If they sent it in error, ask for a corrected 1099-K showing $0. Keep a record of your communications.

You received a 1099-K even though you were under the threshold.

Platforms are allowed to issue 1099-Ks even if you don't meet the federal threshold. You may also have received one for direct credit card payments, which have no threshold. Just use the form to help you accurately report your income.

Real-World Examples for Casual Sellers

The Etsy Crafter

In 2025, if your gross sales of handmade goods on Etsy exceed $2,500, you’ll receive a 1099-K. You can then deduct the costs of your supplies, Etsy fees, and shipping to determine your taxable profit.

The Ticket Reseller

If you sell concert tickets on a resale site and your gross payments in 2024 are over $5,000, expect a 1099-K. The platform fees are business expenses you can deduct.

The Gig Worker (Rideshare/Delivery)

You might get a 1099-K for payments processed from customers and a 1099-NEC for bonuses or incentives paid directly by the company. You must report all income from both.

Your Seller Toolkit: Copy-and-Paste Templates

A) Email to a Platform Requesting a Correction

Subject: Request for Corrected Form 1099-K for [Tax Year]

Hello [Platform Support],

I received a Form 1099-K for the [Tax Year] tax year that appears to be incorrect [or a duplicate/issued in error]. Per IRS guidance, I am requesting a corrected 1099-K. My account is [Your Username/Account ID].

I have attached my records showing the discrepancy. Please confirm you have received this request and let me know the timeline for issuing the corrected form.

Thank you.

B) Summary for Your Accountant

Hi [Accountant's Name],

Here are my 1099-K forms and my sales reports for the year. Please note that the 1099-K shows the gross amount, so we will need to deduct platform fees, shipping costs, and refunds.

Some of these sales were for personal items sold at a loss. Please use the appropriate IRS method (Schedule 1 offset or Form 8949) to ensure I don't pay tax on those transactions.

C) Spreadsheet Headers for Tracking Sales

To stay organized, use a spreadsheet with these columns:
Date | Platform | Gross Payment | Platform Fees | Shipping Costs | Refunds | Net Profit | Item Cost (Basis) | Notes (e.g., Personal Item)

Frequently Asked Questions (FAQ)

1. Do gifts or reimbursements from friends trigger a 1099-K?
They shouldn't. Personal payments for things like splitting dinner or gifts are not taxable. If you receive a 1099-K for these, contact the payment app to have it corrected. Always mark such transactions as "personal" if the app allows it.

2. Do all platforms like Etsy, eBay, and PayPal send a 1099-K?
Yes, they are required to send a 1099-K if you meet the annual threshold ($5,000 in 2024, $2,500 in 2025, etc.).

3. Do shipping costs and sales tax count toward the 1099-K total?
Yes, the form reports the gross amount, which includes any shipping, handling, and sales tax you received. You will deduct these amounts on your tax return.

4. What is backup withholding in Box 4?
This is when a platform withholds tax (at a 24% rate) because your taxpayer identification number (TIN) was missing or incorrect. You can claim this amount as a tax payment credit on your return.

5. Do states have different 1099-K rules?
Some states do have their own, often lower, reporting thresholds. However, your federal responsibility remains the same: report all income, regardless of whether you get a form.

Official IRS Resources

For the most accurate and up-to-date information, always refer to the official IRS sources: