If your freelance business or ecommerce shop accepts any type of payment beyond cash, check, ACH, or direct wire, chances are you’ll receive a 1099-K form at tax time. This form summarizes all the payments your business received from credit cards, debit cards, peer-to-peer payment apps, and online marketplaces throughout the previous calendar year.
You should receive a Form 1099-K from each payment provider or platform you use that meets the reporting threshold for the tax year. The federal reporting threshold dropped significantly in 2025, and it will drop again in 2026, which means more sellers can expect to receive this form.
Understanding this form and how to use it are important steps in keeping your business tax-compliant. Here’s what to know.
What is a 1099-K form?
Form 1099-K summarizes any third-party network transactions that a single company handled for you during the tax year. You may receive one of these tax forms if your business received card payments and/or income from online marketplaces, auction sites, and money transfer apps.
If your business receives at least $2,500 from any of these payment facilitators in 2025, then you’ll receive at least one Form 1099-K by January 31, 2026. You should receive a separate form from each provider that facilitated payments beyond the threshold. The form is designed to help you accurately determine and report taxable income on your return.
The reporting threshold drops to $600 in 2026.
1099-K vs. 1099-NEC vs. 1099-MISC
The 1099-K is similar to two other types of 1099 forms, the 1099-NEC and 1099-MISC. How these tax forms differ:
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Form 1099-K: This IRS form summarizes any payments received from card providers and third-party settlement organizations, or TPSOs. The reporting threshold is $2,500 for 2025 and $600 for 2026 and beyond.
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Form 1099-NEC: Any business that pays a non-employee, such as an independent contractor or freelancer, is typically required to report those payments on Form 1099-NEC. The reporting threshold is $600 per tax year for each payer.
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Form 1099-MISC: This form reports miscellaneous income such as rent, prizes and awards, and royalty income. Any business or individual who received payments of this nature totaling more than $600 in a tax year can expect a 1099-MISC from each payer.
You might even receive all of the above in some tax years. For example, let’s say your illustration business has three different streams of income in 2025. You sell print-on-demand merchandise directly through your Shopify website and book illustration services through a freelance platform like Upwork, and you win money from an art contest. You’ll likely receive a 1099-K from website sales, a 1099-NEC for your freelance services, and a 1099-MISC for the contest’s cash winnings.
Who needs to file a 1099-K form?
Only payment settlement companies that facilitate transactions between buyers and sellers would be responsible for filing a 1099-K. These companies include:
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P2P payment apps like Venmo, CashApp, and Paypal
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Third-party retail platforms such as Shopify, Amazon, Etsy, or eBay
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Credit and debit card companies
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Companies that process payments via gift cards
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Brokers, such as Airbnb and Vrbo, that take reservations and payments if you rent property
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Rideshare companies, such as Uber and Lyft, that book fares and handle fees for drivers
You may receive more than one Form 1099-K if you accept payments on different platforms. For example, let’s say Shopify Payments processes some of your customer payment transactions and Amazon processes a portion as well. As long as transactions meet the reporting threshold for each company, you should get a Form 1099-K from both Shopify and Amazon.
The form will include the gross payment amount, which is the total value of payments you received through payment card and third-party network transactions. The gross amount isn’t adjusted for fees, credits, refunds, shipping, cash equivalents, or discounts. You won’t pay tax on these amounts, but you must account for them. You’ll report the income and then deduct any expenses and refunds.
How do I receive a 1099-K?
If your shop accepts payments from credit or debit card providers, online marketplaces, auction sites, or money transfer apps, you may receive a 1099-K at tax time.
Merchants should receive a copy of the form by January 31 of the year following the tax year in question. (For instance, you should receive a form by January 31, 2026, for payments you received throughout 2025.) The IRS receives a copy, as well as any applicable state and local tax agencies. Payment processors may choose to send you a 1099-K even if you don’t meet the threshold. You still must report taxable income, whether or not you receive a form.
Getting a 1099-K when you shouldn’t
What happens if a friend uses Venmo or another payment app to send you money as a gift or repayment for a personal expense? The IRS says personal payments aren’t considered taxable income. These personal transactions shouldn’t be reported on a Form 1099-K. Typically, this isn’t an issue for merchants who keep separate personal and business Venmo accounts and whose customers tag payments as purchases.
If you receive a 1099-K you believe is in error, check your tax information on the form, such as your business name, employer identification number, and gross receipts. Also, verify that business transactions are properly categorized. If some personal payment transactions are tagged as business income, you may owe income tax on the amount. If the information reported is inaccurate, contact the issuer and ask for a corrected Form 1099-K. The name and telephone number should be listed in the top left corner of the form.
How to report 1099-K income
You can use the information on Form 1099-K to report taxable income on your tax return.
Selling personal items
You might receive a Form 1099-K if you sell personal items—like furniture, clothes, or jewelry—and receive payment through a third-party app or online marketplace. How you report the payments and whether you owe taxes on the income depends on whether you made a profit:
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Sell at a gain: If you gained from the sale of a personal item, the profit (the difference between the selling price and the amount you originally paid for the item) is taxable. Use Form 8949 and Schedule D to report the income and figure your tax liability.
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Sell at a loss: If you sell the item for less than you paid, you still report the income from selling items, but you won’t pay taxes on the earnings. The IRS says you can use the top of Schedule 1 on your tax return to report the payments, or report the loss on Form 8949.
Earning money as a hobbyist
In the eyes of the IRS, a hobby is something you do for enjoyment without the intention of making a profit. You can still earn income as a hobbyist and report it on Schedule 1 (Form 1040) as “other income.” If you accept payments by card, marketplace, or P2P app, then you may receive a Form 1099-K.
One downside to operating as a hobbyist is that you generally can’t deduct expenses related to your hobby from your taxable income.
If your income starts increasing, the IRS may see your endeavor as a business rather than a hobby, and it may categorize your earnings as business income, which allows you to make eligible deductions. This may happen if you turn a profit in at least three of the last five consecutive years.
Earning income as a business
Businesses may also receive a Form 1099-K if a third party — anything from credit cards to online marketplaces to money-transfer apps — facilitates payments to them.
A sole proprietor reports income from a 1099-K on Schedule C (Form 1040), while partnerships use Schedule E (Form 1040), and corporations use either Form 1120 or Form 1120-S.
Business owners may also qualify to deduct eligible business expenses from their gross income.
Form 1099-K FAQ
What is a 1099-K used for?
Form 1099-K is an informational document that payment processing companies and payment apps must issue to individuals and businesses selling goods or services on their platforms.
How do I know if I’m getting a 1099-K?
There’s a chance you’ll get a 1099-K if you accept payments through credit card companies, debit card providers, and third-party settlement organizations like Venmo and Shopify—and if your income exceeds the threshold set by the IRS.
For tax year 2025, you should receive a Form 1099-K if the payments you received for goods or services totaled $2,500 or more per payer. This threshold drops to $600 for tax year 2026 and beyond.
Do I have to report 1099-K income if I don’t have a business?
Yes. As long as the information on the 1099-K is accurate, you have to report it. If you don’t have a business, you would report the income on your personal tax return.
Is 1099-K the same as W-2?
No. Employers use Form W-2 to report wages they pay to an employee and the taxes withheld from their paychecks. A Form 1099-K, on the other hand, summarizes payments that a business receives from a card provider, online marketplace, auction site, or payment app.
