If a US ecommerce shop or freelance business accepts credit cards, debit cards, peer-to-peer app payments, or online marketplace payments, they’ll likely receive Form 1099-K. A separate form comes from each card processor or third-party network. The form reports gross payments processed during a tax year.
Card transactions can trigger a Form 1099-K regardless of the amount. For third-party apps and online marketplaces, the federal reporting threshold is more than $20,000 in gross payments and more than 200 transactions. The One Big Beautiful Bill Act reversed planned reductions and retroactively restored this threshold. State thresholds may be lower.
The form is used with other records when preparing small business taxes. This guide covers what the 1099-K form is and how to report it.
What is a 1099-K form?
Form 1099-K is an IRS form used to report payments from credit cards, debit cards, peer-to-peer apps, and online marketplaces for goods or services during a calendar year. Card processors and third-party networks send the form to both the business and the IRS.
The reported amount represents gross payments. Processing fees, refunds, and business expenses are accounted for separately when preparing a tax return.
1099-K vs. 1099-NEC vs. 1099-MISC
These 1099 forms report different types of payments:
- Form 1099-K. Reports gross card payments and third-party network transactions.
- Form 1099-NEC. Reports payments to independent contractors and other nonemployees. The reporting threshold increased from $600 to $2,000 for payments made in 2026.
- Form 1099-MISC. Reports payments such as rents, prizes, and royalties. Thresholds vary by payment type. For 2026, many categories have a $2,000 threshold. Royalties have a $10 threshold. Check the IRS instructions for details.
Businesses that hire contractors typically request Form W-9 before preparing Form 1099-NEC.
The same income can appear on two forms due to duplicate reporting. For example, if a client pays an illustrator $3,000 by credit card, the processor reports the payment on Form 1099-K. The client may also issue Form 1099-NEC for the same payment. However, IRS guidance states that card and third-party network payments should be reported on Form 1099-K rather than Form 1099-NEC or 1099-MISC. In this case, the client may need to file a correction.
What is the 1099-K reporting threshold?
The Form 1099-K federal reporting threshold for payment apps and online marketplaces is more than $20,000 in gross payments for goods or services and more than 200 transactions per calendar year. Both conditions must be met. Payment card transactions have no federal minimum.
The American Rescue Plan Act of 2021 reduced the threshold to more than $600 with no transaction minimum. The One Big Beautiful Bill Act later reversed that change and retroactively restored the previous threshold.
The table below shows thresholds for the related reporting situations.
| Reporting situation | Threshold | Details |
|---|---|---|
| Credit, debit, and stored-value card payments | Any amount | Payment card transactions have no federal minimum. |
| Payment apps and online marketplaces | More than $20,000 and more than 200 transactions | Both conditions apply to payments for goods or services. |
| Payments subject to backup withholding | Any amount | A form is issued when backup withholding occurs. |
| State reporting rules | Varies | Some states use lower thresholds. |
Some platforms apply additional reporting rules. PayPal and Venmo, for example, issue Form 1099-K to customers who were subject to backup withholding during the year, regardless of their total payments.
The threshold controls when a provider must issue the form. Taxable income remains reportable even when no Form 1099-K is issued.
Who needs to file a 1099-K form?
Payment settlement entities file Form 1099-K. Businesses, freelancers, and other sellers receive a copy when these entities process reportable payments for goods or services.
Filers include:
- Payment card processors that handle credit, debit, or stored-value card transactions
- Payment apps such as PayPal, Venmo, and Cash App
- Online marketplaces such as Amazon, Etsy, and eBay
- Commerce payment services such as Shopify Payments
- Platforms that process bookings or fares, including Airbnb and Uber.
Every platform or processor issues its own form for the payments it handles. A seller who uses Shopify Payments and Amazon may receive a separate Form 1099-K from each company.
Zelle is an exception. The Zelle Network doesn’t issue Form 1099-K or report transactions to the IRS because the reporting law doesn’t apply to its network. Taxable business income received through Zelle still belongs on the recipient’s tax return.
How do I receive a 1099-K?
A payment processor or platform sends Form 1099-K directly to the recipient. The provider also files a copy with the IRS and any applicable state tax agency. The recipient copy is due by January 31 following the reported calendar year.
A Form 1099-K generally excludes:
- Cash and check payments
- Direct ACH and wire transfers
- Personal gifts and expense reimbursements
Providers may issue the form below the federal threshold. Taxable income is reportable even when no form is issued.
How to find your 1099-K in your Shopify admin
Stores that meet applicable federal or state reporting rules can download Form 1099-K from the Shopify admin. Shopify emails the account owner when the form is ready in January. Store owners and staff with the View tax documents permission can access it.
On desktop:
- From the Shopify admin, go to Finance.
- Click Documents, then 1099-K.
- Select the form you want to download.
On mobile, tap Menu, then Finance. Open the Finance menu and select Documents > 1099-K. Tap the form to download it.
If the form doesn’t appear, the account may not have met the applicable threshold. Shopify considers payment volume across stores that share the same taxpayer identification number to determine eligibility.
Shopify’s form excludes PayPal Express transactions, manual payment methods, and cash sales. Another processor may issue a separate form for those transactions. To review the included payments, go to Finance > Payouts > View order transactions > Export. Select 1099-K Transactions and choose a date range.
Getting a 1099-K when you shouldn’t
Personal gifts and reimbursements generally shouldn’t appear on Form 1099-K. Use the following checklist to review a form that may be incorrect:
- Confirm the legal name, address, and employer identification number.
- Compare the gross amount with payment processor statements.
- Check for personal payments that were categorized as purchases.
- Check for transactions already reported on another Form 1099-K.
- Confirm that the form belongs to the correct person or business.
It’s possible the amount may also include transactions that belong elsewhere, such as:
- Payments processed through a shared card terminal
- Transactions from before or after a business sale
- Payments linked to an old business entity or tax ID
- Cash-back amounts from debit card transactions
- Multiple sources of business income
The IRS has instructions for reconciling the amount in such situations, including requesting a correction from the issuing party. If you get a Form 1099-K you shouldn’t have or receive one with incorrect information, the IRS advises filing your tax return by the deadline even if a corrected form hasn’t arrived. TurboTax recommends filing with the correct information and keeping documentation to show the amounts you report are accurate, along with any correspondence related to correction requests, in case the IRS asks why there’s a discrepancy between your return and what’s on file.
How to report 1099-K income
Report Form 1099-K payments based on what the transactions represent. The form may include business receipts, hobby income, or proceeds from personal property sales.
Compare the gross amount with transaction records before entering the taxable amount on the applicable document. Keep the form with processor statements, sales reports, and expense records as part of your tax preparation process.
Selling personal items
You may receive Form 1099-K after selling personal items through an online marketplace or payment app. The tax treatment depends on whether the item sold at a gain or loss:
- Sale at a gain. The taxable gain equals the selling price minus the item’s cost basis. Report the sale on Form 8949 and carry the result to Schedule D.
- Sale at a loss. A personal loss is generally nondeductible. The IRS allows taxpayers to report the payment on Schedule 1 with an offsetting adjustment. Taxpayers can also report the sale on Form 8949 and Schedule D.
Keep records showing the original purchase price. The 1099-K reports sale proceeds rather than the gain or loss.
Earning money as a hobbyist
A hobby is an activity pursued for recreation or personal enjoyment. Report hobby income as other income on Schedule 1. Hobby losses generally can’t offset income from other sources.
An activity that earns a profit in at least three of five consecutive tax years is generally presumed to operate for profit. However, the three-of-five-years test is one consideration. The IRS weighs all relevant facts, and no single factor determines whether an activity is a hobby or business. Businesslike records and changes intended to improve profitability can also indicate a profit motive.
Earning income as a business
Businesses reconcile Form 1099-K with their books and report each payment once on the appropriate business tax return. Eligible business expenses can reduce taxable business income. Form 1099-K reports payments before subtracting fees, refunds, credits, shipping costs, and discounts, which are nontaxable items that can be deducted from the gross amount.
The applicable return depends on the business’s federal tax classification:
- Sole proprietors and most single-member LLCs: Schedule C.
- Partnerships: Form 1065, with each partner receiving Schedule K-1.
- C corporations: Form 1120.
- S corporations: Form 1120-S, with each shareholder receiving Schedule K-1.
Sole proprietors, partners, and LLC owners may also owe self-employment tax on net earnings.
Store owners who use Shopify Balance can download monthly statements and export posted account transactions for their records. Balance deposits may differ from Form 1099-K because the form reports gross Shopify Payments transactions before fees, refunds, and other adjustments.
Tax treatment depends on the transaction and business structure. This information is educational and isn’t tax advice. A qualified tax professional can confirm the forms and deductions that apply.
Form 1099-K FAQ
Do I have to report 1099-K on my tax return?
Report the taxable income represented on Form 1099-K. The form isn’t a separate income category. Enter each payment on the return or schedule that matches the activity. A sole proprietor generally reports business receipts on Schedule C.
Does a 1099-K mean I owe money?
No. Form 1099-K reports gross payments rather than tax due. Tax depends on the transaction and any allowable basis or expenses. For example, selling a personal item at a loss generally produces no taxable gain.
How does a 1099-K affect my taxes?
Form 1099-K gives the recipient and the IRS a record of gross payments processed during the year. Reconcile the amount with other records. Processing fees, refunds, and eligible business expenses may reduce the income subject to tax.
How do I know if I’m getting a 1099-K?
You may receive Form 1099-K if you accept payment cards or payments for goods or services through apps and online marketplaces. Payment card transactions have no federal reporting minimum. Apps and marketplaces must issue one when gross payments exceed $20,000 across more than 200 transactions. State thresholds or backup withholding can trigger one sooner.
Is 1099-K the same as W-2?
No. Employers use Form W-2 to report wages they pay to an employee and the taxes withheld from their paychecks. A Form 1099-K, on the other hand, summarizes payments that a business receives from a card provider, payment app, or online marketplace.
