If you sell online or take payments through apps, you may get a Form 1099-K. The reporting threshold has been changing, and it confuses a lot of sellers. Here is what actually matters.
What a 1099-K is
It is an information return from payment platforms (marketplaces, card processors, payment apps) reporting the gross payments they processed for you. The IRS gets a copy.
The threshold shift
Thresholds for when platforms must issue a 1099-K have been moving lower over recent years, meaning far more casual and part-time sellers now receive one. Watch for the current year's figure.
A 1099-K is not new income
Getting a 1099-K does not mean you owe tax on the whole amount. It reports gross payments — your taxable profit is after costs, fees and refunds. But you must report and reconcile it.
What to do
- Keep records of costs, fees and refunds to offset gross sales
- Separate personal sales (e.g. selling used items at a loss) from business income
- Reconcile the 1099-K to your books so the IRS figure matches your return
Selling across states too? Check your sales-tax nexus and get your books reconciled by a CPA & EA team.
How to reconcile a 1099-K
Your 1099-K reports gross payments processed, before fees, refunds, and chargebacks. Your taxable income is what remains after legitimate business costs.
Match the 1099-K total to your own records, then report income on the correct schedule and deduct your expenses so you're not taxed on the gross.
Keep documentation for fees, refunds, and any personal (non-business) transactions that shouldn't be taxed.
Personal sales vs business income
Selling personal items at a loss — like used furniture — is generally not taxable, even if it appears on a 1099-K. But you must be able to show it.
Business sales, side-hustle income, and reselling for profit are taxable and belong on your return.
When personal and business activity mix on one account, clean records are what keep the IRS figure and your return aligned.
Why a 1099-K is not new taxable income
The single biggest misunderstanding is that receiving a 1099-K means you owe new tax. It does not. A 1099-K is an information report of your gross payment volume through a platform — it does not account for refunds, fees, or your cost of goods. Your taxable income is your profit, which you have always owed tax on whether or not a form was issued.
What changed and who it affects
The reporting threshold for third-party payment networks has been in flux, moving toward a much lower level than the old $20,000-and-200-transactions standard. The result is that far more casual sellers, freelancers, and gig workers now receive a 1099-K — including people who simply sold personal items.
The IRS maintains current details on its Understanding Your Form 1099-K page.
How to reconcile it correctly
When a 1099-K arrives, match it to your records. Separate business sales from personal-item sales (selling used goods at a loss is generally not taxable, though it must be reported correctly). Subtract platform fees, refunds, and cost of goods to arrive at the profit you actually report.
If your sales also cross state lines, the same volume that triggers a 1099-K can create sales-tax obligations — check exposure with our sales-tax nexus checker and read the Amazon FBA sales tax guide.
What to do if you get one in error
If a 1099-K is wrong — duplicates, personal transfers miscoded as payments, or amounts that are not yours — contact the issuer for a correction first. If it cannot be fixed in time, there are correct ways to report and back out the amount on your return. A CPA or EA can make sure it is handled so you are not taxed on money that was never income.
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Read the guide →Frequently asked questions
Does a 1099-K mean I owe tax on the whole amount?
No. A 1099-K reports gross payments. Your taxable income is after fees, refunds, and business expenses.
Why did I get a 1099-K this year?
Reporting thresholds have moved lower, so far more casual and part-time sellers now receive one from marketplaces and payment apps.
Do I owe tax on selling personal items?
Selling personal items at a loss is generally not taxable, but you should keep records to show it. Reselling for profit is taxable.
What should I do when I receive a 1099-K?
Reconcile it to your own records, report the income, and deduct legitimate costs so you're taxed on profit, not gross sales.