For four years, online sellers heard the same scary headline: “the IRS will send you a 1099-K if you make $600.” Resellers panicked. Casual Venmo users panicked. Some people stopped selling altogether.
That rule is dead. The One Big Beautiful Bill Act (OBBBA) retroactively erased the $600 standard and restored the old one. Here is what actually applies in 2026 — and what Shopify, Amazon, eBay, Etsy, Poshmark, and Venmo users actually owe.
Every figure below is sourced to the IRS, current as of June 11, 2026.
Key takeaways:
- The federal 1099-K threshold for marketplaces and payment apps is back to more than $20,000 AND more than 200 transactions.
- You can still receive a form below that — and all income is taxable whether a form arrives or not.
- A 1099-K reports gross payments. It is not your taxable income.
- Selling your own stuff at a loss is not taxable — but you may need to show the IRS where the number went.
- Money from friends and family on Venmo or PayPal is not reportable and not taxable.
What is the 1099-K threshold now?
The IRS states it directly: OBBBA “retroactively reinstated the reporting threshold in effect prior to the passage of the American Rescue Plan Act of 2021,” so third-party settlement organizations file a 1099-K only when gross payments to a payee “exceed $20,000 and the number of transactions exceeds 200” (IRS Form 1099-K FAQs).
Quick history, because the whiplash confused everyone:
- The American Rescue Plan Act of 2021 dropped the threshold to $600.
- The IRS delayed that rule year after year with transition relief.
- OBBBA (Public Law 119-21, signed July 4, 2025) wiped the change out retroactively.
The result: the rule sellers knew before 2021 is the rule again.
Why you might still get a 1099-K below $20,000
Three reasons a form can still show up:
- Payment-card transactions have no threshold. If customers pay you by card through a merchant processor, those payments are reportable from the first dollar (IRS, Understanding Your Form 1099-K).
- Some states set lower reporting levels. Platforms follow state filing rules too, so sellers in certain states receive forms well under the federal TPSO standard.
- Platforms may simply issue them. Nothing stops a marketplace from reporting below the requirement.
None of this changes what you owe. Forms report; they don’t tax.
A 1099-K is not your income
The number in Box 1a is gross payment volume. Before you treat it as revenue, it still contains:
- Platform and processing fees that were netted from your payouts
- Refunds and chargebacks you never kept
- Sales tax the platform collected and remitted on your behalf
Sellers who copy the gross number onto a return overpay. Sellers who report less than the gross number without a reconciliation invite the most common e-commerce IRS letter: the CP2000 mismatch notice. The fix is the same either way. Reconcile every 1099-K — one per platform and processor — to your books before filing. That is a standard month-one task in ProAxis e-commerce bookkeeping.
Casual sellers: personal items, gifts, and Venmo
Most 1099-K fear comes from people who are not running a business at all. The IRS rules are friendlier than the headlines:
- Personal items sold at a loss — old furniture, clothes, electronics sold for less than you paid — are not taxable, and the loss is not deductible. If the payments landed on a 1099-K, report the amount at the top of Schedule 1 (Form 1040), or use Form 8949 and Schedule D, so the IRS sees it was not income (IRS, What to Do With Form 1099-K).
- Personal items sold at a gain — the rare collectible that appreciated — are reported on Form 8949 and Schedule D as capital gains.
- Friends-and-family payments — gifts, split bills, shared rent — “should not be reported on a Form 1099-K” and are not taxable income, per the IRS.
One habit prevents most problems: keep goods-and-services payments and personal transfers in separate apps or clearly tagged. Mixed accounts are how reimbursements end up on tax forms.
Business sellers: what to actually do for 2026
If you sell for profit — even as a side hustle — the playbook is short:
- Report all income, with or without forms. The threshold changes reporting paperwork, not taxability.
- Reconcile each 1099-K to your books at year-end. Document every reconciling item: fees, refunds, sales tax collected.
- Track cost of goods and expenses so you are taxed on profit, not deposits. Platform fees, shipping, and ad spend are deductible.
- Pay quarterly estimates if you expect to owe — seasonal Q4-heavy sellers should forecast, not divide last year by four.
- Revisit entity structure once profit is consistent — the S-Corp analysis and QBI planning both key off how you are organized.
If you ship to customers in several states, your income-tax filings can follow your sales. Out-of-state sellers often owe returns wherever they have nexus, not just in their home state. Our multi-state tax guidance for out-of-state clients walks through how that works.
The full e-commerce tax picture — inventory accounting, QBI, estimated taxes — lives on the ProAxis e-commerce CPA page, with curated tools on the e-commerce seller resource hub.
Hobby or business? The line that decides your deductions
Somewhere between selling your old golf clubs and running a storefront, a hobby becomes a trade. The distinction matters more than the 1099-K itself.
A business operates for profit with regularity. Business sellers report income and deduct expenses — cost of goods, fees, shipping, mileage — and pay self-employment tax on the profit. They can also show a loss in a bad year.
A hobby is an activity without a profit motive. Hobby income is still reportable as other income. But hobby expenses are not deductible against it under current law. That asymmetry surprises people: a hobby seller can owe tax on gross-ish numbers a business seller would never pay.
The IRS weighs facts: whether you keep records, the time and effort involved, your history of profit, and whether you depend on the income. Sellers near the line should make the call deliberately, with records to back it. The wrong self-classification costs real money in both directions.
Sales tax is a separate question
A 1099-K has nothing to do with sales tax. Since the Supreme Court’s Wayfair decision, states can require collection once your sales into the state cross economic-nexus thresholds — no warehouse needed. If you sell into multiple states, read the multi-state sales tax guide for e-commerce sellers, which covers thresholds, marketplace facilitator rules, and what to do about prior-year exposure.
Form 1099-K FAQ
What is the Form 1099-K reporting threshold for 2026?
Under the One Big Beautiful Bill Act, third-party settlement organizations — marketplaces and payment apps — file a Form 1099-K only when a payee’s gross payments exceed $20,000 AND the number of transactions exceeds 200. The law retroactively reinstated the threshold that applied before the American Rescue Plan Act of 2021. Payment-card transactions are reported with no minimum, and platforms or states may still generate forms below the federal TPSO threshold.
Do I owe taxes if I didn’t get a 1099-K?
Yes, if you had business or sale income. The 1099-K is an information report, not a definition of taxable income. All income from selling goods or services is reportable whether or not any form arrives. The reverse is also true: receiving a 1099-K does not automatically mean the full amount is taxable, because the form shows gross payments before fees, refunds, and cost of goods.
I sold personal items at a loss on eBay or Poshmark — is that taxable?
No. Selling your own used items for less than you paid is not taxable income, and the loss is not deductible. If a 1099-K reports those payments anyway, the IRS says to report the amount at the top of Schedule 1 (Form 1040) so you do not pay tax you do not owe, or alternatively report the sales on Form 8949 and Schedule D. Personal items sold at a gain are reported on Form 8949 and Schedule D.
Are Venmo payments from friends and family taxable?
No. The IRS states that money received from friends and family as a gift or as repayment of a personal expense should not be reported on a Form 1099-K and is not taxable income. Splitting a dinner bill, sharing rent, or receiving a birthday gift are not reportable transactions. Only payments for goods and services belong on a 1099-K.
What should I do if my 1099-K is wrong or duplicated?
Contact the issuer shown in the top-left “Filer” box and request a corrected Form 1099-K showing a zero amount. Do not wait for the correction to file your return — the IRS says to file on time and report the incorrect amount at the top of Schedule 1 (Form 1040) so the discrepancy is accounted for. Keep records of the correction request.
Does a 1099-K mean I owe sales tax too?
Not by itself — sales tax is a completely separate system. Income tax is owed on your profit and reported on your federal and state returns. Sales tax is collected from buyers and remitted to states where you have nexus, which since the 2018 Wayfair decision can be triggered by sales volume alone. A seller can owe sales tax in many states and receive no 1099-K, or get a 1099-K and owe sales tax nowhere. Talk to ProAxis if you sell across state lines.
This article is general information for online sellers. It is not tax advice and does not create a CPA-client relationship. Rules apply differently to each situation, and results vary. Figures are current as of June 11, 2026 and sourced to the IRS. Confirm your specifics with a licensed CPA before you act.