The 1099-K threshold: $20,000 and 200 transactions
Payment apps and marketplaces file Form 1099-K only above $20,000 and 200 transactions. The 2025 law reversed the $600 rule. How to report income either way.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 24, 2026.
Payment apps and marketplaces file Form 1099-K with the IRS only if a person's gross payments pass $20,000 and the count of transactions passes 200 in the year. The 2025 law brought that limit back retroactively, so the $600 level never applied. Credit and debit card processors have no floor. Income counts whether or not a form is sent.
- Both conditions must hold: payments over $20,000, and a transaction count over 200.
- You might get a form while under the threshold, and the income is taxable regardless of whether any form shows up.
- For payments made after December 31, 2025, Forms 1099-NEC and 1099-MISC start at $2,000 instead of $600.
- Payees should receive their statement by January 31, which is February 1, 2027 by our calendar math.
- Illinois adds a filing trigger for payers: an Illinois-address payee with at least four transactions that add up to more than $1,000.
How to report what is on a 1099-K
| What the payments were | Where it goes |
|---|---|
| Business sales | Schedule C |
| Belongings you sold for a gain | Form 8949 and Schedule D |
| Belongings you sold for a loss | No deduction is allowed. The IRS says to write the total of your 1099-K amounts in the entry box at the head of Schedule 1. |
| Money a friend sends as a gift or to repay you | Not income |
How the rule got here
A 2021 law set the limit at $600. The IRS kept the old $20,000 and 200 rule for 2023 and announced a phase-in for later years. The 2025 law then restored $20,000 and 200 transactions, retroactively.
An example (invented, tax year 2025)
Mina sells handmade candles through an online marketplace. Her 2025 payments total $9,400 across 130 orders, under both limits, so no form is required. The $9,400 is still business income on Schedule C, with her costs and fees.
What to bring or do next
- The year-end summary from each payment app or marketplace.
- Monthly records of sales, fees, shipping and refunds.
- Separate accounts for personal and business payments, where you can.
- If a form includes gifts or reimbursements, keep the records that show why, and tell us.
Common questions
I got a 1099-K for under $20,000. Do I report it?
Yes, when the money was income. A form can reach you even below the limit, and tax applies with or without one.
Does the $600 threshold ever apply?
Not for payment apps and marketplaces. The 2025 law restored $20,000 and 200 transactions, so the $600 level never applied. The $600 figure was the old limit for Forms 1099-NEC and 1099-MISC, which is now $2,000 for payments after 2025.
Are gifts from friends income?
No. A gift from a friend, or money sent to cover your share of a bill, is not income. Keep the payment notes in case a form includes it.
Does Illinois have its own rule?
Illinois asks payers to report to the state when a payee with an Illinois address has at least four transactions adding up to more than $1,000. That rule is aimed at payers. Your income is taxable either way.
Official sources
- IRS: FAQs on the Form 1099-K threshold under the One Big Beautiful Bill
- IRS: Understanding your Form 1099-K
- IRS: Form 1099-K FAQs, common situations
- Illinois Department of Revenue: Publication 110
- Public Law 119-21, enacted text
Keep reading
- How are crypto and digital assets taxed (Form 1099-DA)?
- How do I calculate adjusted gross income (AGI)?
- Services for the self-employed
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