Taxpayers who made money online or through payment apps in 2024 might get a new tax form in the mail – a 1099-K.
This form reports payments people receive through third-party platforms. But it doesn’t mean people owe taxes on all of it.
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In the past, taxpayers would only get a 1099-K form if they made over $20,00 and had more than 200 transactions made online or through third-party platform. The threshold this year dropped to just $5,000 -- no transaction minimum required. That means a lot more people will be getting this form for the first time. For the 2025 tax year, that threshold will drop to $2,500.
“You’ve always been required to report any income that you've made from a service or sale of an item,” Rogers explained. “Just what's different now is that these vendors have the requirement to let you know and let the IRS know," Jeff Rogers, a tax partner at EJ Callahan & Associates LLC in Wakefield, explained.
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People just getting reimbursed for concert tickets or selling an old couch for less than what was paid, that’s not considered taxable income.
“A payment for a concert or going out to dinner or anything like that, that’s not in the spirit of this and this is not what's supposed to be reported,” said Rogers. “These apps have some functionalities set up, where you can identify the payments that you're making as just that payments between family friends .”
Income that does need to be reported includes anyone selling goods regularly for a profit.
“Even if you haven't received the form, you still are supposed to be reporting that. So, if you have good records and you know the amounts that you received -- make sure that the numbers that are on those forms are not in excess of what you truly did receive for services or sales of goods,” said Rogers.
The payment transfer service Zelle Is exempt from issuing 1099-Ks because the payment app doesn’t hold funds in an account, like PayPal or Venmo. If anyone is paid for freelance or small business services through Zelle, it is the taxpayer’s responsibility to report all income on their tax return.
