Lower 1099-K Threshold Means More Gig and Resale Income Gets Reported
Payment apps and online marketplaces are sending more forms this year, catching casual sellers who may owe nothing but must still account for it.
A lower reporting threshold for payment apps and online marketplaces means many more Americans are receiving 1099-K forms this year, including casual sellers and side-hustlers who may have never seen one before.
The form reports payments processed through platforms, and the reduced threshold captures a much wider swath of activity, from reselling concert tickets to occasional freelance gigs. Receiving a form does not by itself mean you owe tax.
Reported does not mean taxable
The key distinction is between gross payments and taxable profit. Selling personal items at a loss, for example, generally is not taxable, but the payment still shows up on the form and must be reconciled on the return.
Tax professionals urge recipients to keep records of what they paid for items they resell, since profit is what matters. For genuine side income, the form is a reminder that the earnings were always taxable, threshold or not.
Avoiding a mismatch
The bigger risk is a mismatch between the form and the return, which can trigger an automated notice. Reporting the income and then adjusting for cost basis or personal-loss items keeps the paperwork consistent. When in doubt, a brief consultation can save a headache later.
More in Taxes & IRS
Bella Vida Nails & Spa: The Card Reader That's Always Down: What Every Owner Should Know About Payment Apps and the IRS
When the card reader is conveniently down and everyone is asked to pay by Zelle, Venmo, or cash, the money is easy to leave off the books. Here is why that habit raises concern with the IRS, and why the trail is never as invisible as it looks.
VENICE NAIL STUDIO: The Charge That Doesn't Show Up: What Every Nail Salon Owner Should Understand About Taxes
Charging part of a service on the card and quietly collecting the rest off the books has a name, skimming, and it is one of the surest ways to raise concern with the IRS. Here is why it is riskier than it looks, and what honest owners do instead.
Gel Nails in Ohio: Half on the Check, Half in Cash: The Payroll Habit the IRS Takes Most Seriously
Paying part of a worker's wages in cash off the books can feel like a win for everyone, but of all the habits in this series it's the one the IRS treats most seriously. Here is why it raises concern, and why it quietly hurts your staff too.