As tax season approaches, individuals who operate side businesses, sell items online, or receive payments through digital apps should be aware of a vital tax form: Form 1099-K. Understanding when you’ll get this form and how to report the income correctly can help you file your taxes without problems.

What Is Form 1099-K?

Form 1099-K is a tax form that reports payments you received through online marketplaces and payment apps. The IRS gets a copy, and you get a copy too. This means you need to report this income correctly on your tax return.

When Will You Get Form 1099-K?

You should expect to receive Form 1099-K in January 2026 if you meet both of these requirements during 2025:

  • You received more than $20,000 in payments for goods or services, AND
  • You had more than 200 transactions

Both conditions must be true for the form to be sent. This applies to platforms like PayPal, Venmo, Cash App, eBay, Etsy, and other payment networks. If your customers pay you directly with credit cards, debit cards, or gift cards, you’ll get Form 1099-K no matter how much money you received or how many payments you got.

Common Platforms That Issue Form 1099-K

You might receive this form if you use any of these types of platforms:

  • Payment apps (like Venmo, PayPal, Cash App)
  • Online marketplaces (like eBay, Etsy)
  • Craft or maker marketplaces
  • Auction sites
  • Car sharing or ride-hailing platforms (like Uber, Lyft)
  • Ticket resale sites
  • Crowdfunding platforms
  • Freelance marketplaces

If you use more than one platform, you could get multiple Form 1099-K forms.

What Income is Taxable?

The Form 1099-K doesn’t change which income is taxable. It reports what the IRS already knows about. All income is still taxable, whether you get a form or not.

You must report all income from:

  • Part-time jobs and side work
  • Selling goods and services
  • Freelance or gig economy work
  • Online marketplace sales
  • Items sold for more than you paid (even personal items like clothing or furniture)

You must report all this income on your tax return, whether you receive Form 1099-K, Form 1099-NEC, Form 1099-MISC, or no form at all.

What About Personal Payments?

Not everything you receive through payment apps is taxable income. Money from friends and family for personal reasons is not taxable and should not be on Form 1099-K.

Examples of non-taxable personal payments:

  • Splitting the cost of dinner with friends
  • Birthday or holiday gifts
  • Roommate paying you back for rent or utilities
  • Someone repaying you for a shared car ride

When using payment apps, mark these transactions as “personal” or “friends and family” when possible. This helps prevent them from being reported on Form 1099-K.

What to Do When You Receive Form 1099-K

When your Form 1099-K arrives in January, follow these steps:

  1. Review the information carefully to ensure all details are accurate and match your records.
  2. Compare your records with the form and use it in conjunction with your bookkeeping to determine your actual taxable income.
  3. Separate business from personal, as not all amounts on Form 1099-K may be taxable income (like personal reimbursements or gifts).
  4. Report only taxable income on your tax return, and include only the actual business income, not necessarily the full amount shown on the form.

What If You Get Form 1099-K By Mistake?

Sometimes people receive Form 1099-K when they shouldn’t. This can happen if:

  • The payments were personal, not for business
  • The payments were reimbursements
  • There was a mistake in the reporting

If you believe you received the form in error, please contact the payment platform that sent it and request that they correct the issue. Keep detailed records to support your case.

Important Tax Credit Updates for 2025

While getting ready for tax season, know about these tax credit changes:

  • Child Tax Credit (CTC): Now worth up to $2,200 per child (increased from $2,000 in 2024). Your child must be under age 17 at the end of 2025.
  • Earned Income Tax Credit (EITC): Individuals without children may be eligible for up to $649.
  • Credit for Other Dependents (ODC): Available if your dependent is age 17 or older at the end of 2025.

Changes to How You’ll Get Your Refund

For 2025, the IRS has made changes to how refunds are paid. The agency is phasing out paper checks and will ask for your banking information on all tax returns. This means refunds will be sent by direct deposit or electronic transfer. While the IRS prefers electronic payments for taxes you owe, it’s not required yet.

If you claim the EITC or Additional Child Tax Credit (ACTC), the IRS cannot send refunds before mid-February. This delay applies to your entire refund, not just the credit portion.

Getting Ready for Tax Season

As you prepare for the upcoming tax season, review your payment platform activities to see if you’ll receive Form 1099-K. Start organizing your records now. Talk with CPA Nerds today to ensure you report everything correctly and take advantage of all available tax benefits.