What Is a 1099-K? Who Gets One and What to Do With It

What a 1099-K actually is

A 1099-K is an information return. That is IRS speak for a form a third party files to tell the IRS about money that moved. Specifically, payment card companies, payment apps and online marketplaces use it to report the gross payments they routed to you during the year.

Think of it as a heads-up, not a bill. The platform is saying "we paid this person this much," and a copy goes to both you and the IRS. It does not calculate what you owe. It just reports a number.

Who gets one

You might receive a 1099-K if you got paid through any of these:

• Payment apps and digital wallets like PayPal, Venmo or Cash App (for goods and services, not personal transfers)
• Card processors like Stripe or Square that settle credit and debit card sales
• Online marketplaces like Etsy, eBay, Amazon or Airbnb that handle the money for you
• Ride-share and delivery platforms that pay out through a settlement system

If you run a small business, sell online, freelance with card payments, or rent out a place through an app, you are a candidate. The form is tied to how you got paid, not what you do.

The reporting threshold (and the year that matters)

This is the part that has whipsawed for a few years, so here is where it stands.

The American Rescue Plan Act of 2021 had set a very low bar (more than $600, with no transaction count). The IRS delayed that, then planned a phase-in ($5,000, later $2,500). Then the One Big Beautiful Bill retroactively reinstated the older, higher threshold.

So as of the 2025 tax year and going forward, the federal rule is back to this: a third-party settlement organization is required to file a 1099-K only when your gross payments exceed $20,000 AND you have more than 200 transactions. Both conditions have to be met.

A few important caveats:

• States can be stricter. Several states set their own, lower thresholds, so you might get a 1099-K well under the federal limit.
• Platforms can over-report. Some send a 1099-K even when you are below the threshold, just to be safe.
• The threshold is not a tax-free line. This is the big one. The IRS is clear: "No matter the amount of reported payments, if you receive payments for selling goods or services, you must report all income on your tax return." No form does not mean no tax.

What the number on the form means

The figure in Box 1a is gross. It is the total before payment processing fees, before refunds you issued, before chargebacks, and before any of your own costs. That means the 1099-K almost always overstates what you actually earned.

That gap is exactly why records matter. Your taxable profit is gross income minus legitimate business expenses, and the only way to prove those expenses is to have the receipts. Solid expense records are what turn a scary gross number into a fair, much smaller taxable amount.

Tip: When a 1099-K lands, do not panic at the size of Box 1a. Match it against your own books first. Fees and refunds alone often knock a real chunk off before you even count expenses.

1099-K vs 1099-NEC

These two get mixed up constantly, so here is the clean version.

• A 1099-K comes from a payment settler: a card processor, a payment app, a marketplace. It reports money that flowed through a platform.
• A 1099-NEC comes from a client or company that paid you directly for services, usually $600 or more.

The risk is double counting. If a client pays you through PayPal for goods and services, that income could show on both a 1099-NEC from the client and a 1099-K from PayPal. You still only report the income once. Reconciling your forms against your own records keeps you from accidentally paying tax on the same dollar twice.

What to do when you get one

1. Check that your name, taxpayer ID and the gross amount are correct.
2. Pull out anything personal. Money from friends splitting dinner is not income, and the IRS has steps for correcting a 1099-K you got in error.
3. Reconcile the gross figure to your bookkeeping, noting fees and refunds.
4. Report your income (usually on Schedule C) and subtract your real expenses.
5. Keep the receipts and statements that back up every number.

The faster way: let Mylo do the receipt work

The stressful part of a 1099-K is not the form, it is proving the costs that offset it. That is where most people fall behind, because the receipts are scattered across inboxes and apps. Mylo fixes that quietly in the background: it finds receipts across your email and the stores you buy from, matches each one to the card transaction that paid for it, and categorizes the expense automatically.

So when a 1099-K shows up reporting a big gross number, the deductions that bring it down to real profit are already captured and filed. No shoebox, no scramble. Mylo works on top of the Visa, Mastercard or Amex you already use, and it is free on iOS, Android and the web.

This is general information, not tax advice. Rules and thresholds change and vary by state, so confirm the current details for your situation with the IRS or a tax professional.

Sources: IRS.gov, "IRS issues FAQs on Form 1099-K threshold under the One, Big, Beautiful Bill," "Understanding your Form 1099-K," and "Form 1099-K FAQs." Verified June 2026.