{"id":2131,"date":"2025-08-06T12:52:11","date_gmt":"2025-08-06T12:52:11","guid":{"rendered":"https:\/\/ft365.org\/index.php\/2025\/08\/06\/new-1099-k-reporting-rules-if-you-get-paid-through-venmo-cash-app-paypal-bankrate\/"},"modified":"2025-08-06T12:52:11","modified_gmt":"2025-08-06T12:52:11","slug":"new-1099-k-reporting-rules-if-you-get-paid-through-venmo-cash-app-paypal-bankrate","status":"publish","type":"post","link":"http:\/\/ft365.org\/index.php\/2025\/08\/06\/new-1099-k-reporting-rules-if-you-get-paid-through-venmo-cash-app-paypal-bankrate\/","title":{"rendered":"New 1099-K Reporting Rules If You Get Paid Through Venmo, Cash App, PayPal | Bankrate"},"content":{"rendered":"
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Millions of Americans who sell goods online or use third-party platforms such as PayPal, Cash App or Venmo will soon face new tax reporting rules under changes introduced by the One Big Beautiful Bill Act.<\/p>\n

The bill, signed into law by President Donald Trump on July 4, brings sweeping tax policy reforms, including a reversal of previously planned 1099-K reporting thresholds.<\/p>\n

\u201cThe changes will offer much-needed relief for casual sellers and small business owners who use platforms like PayPal, Venmo and Etsy,\u201d says Ella Rivkin, CEO of ERPS Group, an accounting firm in New York City.<\/p>\n

Prior to the new tax law, the IRS was set to lower the reporting threshold to $600 starting in 2026. That would have dramatically increased the number of taxpayers receiving Form 1099-K. The new law reverses that plan, offering relief to millions.<\/p>\n

Here\u2019s how the new 1099-K rules work<\/h2>\n

Under the \u201cbig, beautiful bill,\u201d the 1099-K reporting threshold reverts to $20,000 in payments and 200 transactions in a calendar year, effective for 2025 and beyond. This means fewer taxpayers will receive the forms \u2014 a welcome change for those who use platforms like PayPal or Venmo for occasional sales or personal transfers.<\/p>\n

\u201cBy reinstating the $20,000 and 200-transaction threshold for reporting, the law eliminates confusion and reporting requirements for individuals who occasionally sell personal items,\u201d Rivkin says.<\/p>\n

The updated rules also eliminate confusion caused by the American Rescue Plan Act, which had lowered the threshold to $600 beginning in 2026. To give third-party settlement organizations more time to comply with the 1099-K reporting requirements, the IRS announced in 2024 a phased-in approach to the reporting rules.<\/p>\n

Here\u2019s a snapshot of the rules before and after the \u201cbig, beautiful\u201d tax law:<\/p>\n

1099-K reporting thresholds<\/h3>\n
\n\n\n\n\n\n\n\n\n
\u00a0<\/th>\nBefore the \u2018big beautiful bill\u2019<\/th>\nCurrent law<\/th>\n<\/tr>\n<\/thead>\n
2023 and earlier<\/td>\n$20,000+ and more than 200 transactions<\/td>\n$20,000+ and more than 200 transactions<\/td>\n<\/tr>\n
2024<\/td>\n$5,000+<\/td>\n$5,000+<\/td>\n<\/tr>\n
2025<\/td>\n$2,500+<\/td>\n$20,000+ and more than 200 transactions<\/td>\n<\/tr>\n
2026<\/td>\n$600+<\/td>\n$20,000+ and more than 200 transactions<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

\u201cFor the 2024 tax year, the IRS will continue using a $5,000 threshold, which was implemented as a transitional measure away from the $600 rule,\u201d Rivkin says. \u201cTaxpayers should be aware of the differences in reporting rules for 2024 and 2025.\u201d<\/p>\n

The new law applies beginning with the 2025 calendar year, which means the updated 1099-K thresholds will apply to tax returns filed in 2026. Companies must issue Form 1099-K by January 31 of the following year.<\/p>\n

Zelle is an exception<\/h2>\n

While most platforms are required to follow 1099-K reporting requirements, Zelle doesn\u2019t fall within that category.<\/p>\n

\u201cThe Zelle platform directly transfers funds from one bank account to another, similar to a wire transfer,\u201d says Monica Houston, a certified public accountant in Brentwood, Calif.<\/p>\n

\u201cBecause Zelle never has custody of the funds \u2014 it simply moves money \u2014 it is not subject to 1099-K reporting requirements,\u201d she says.<\/p>\n

Who is likely to receive a 1099-K?<\/h2>\n

Form 1099-K is issued to taxpayers who receive payments for selling goods or providing services through third-party networks. Even if you don\u2019t meet the threshold, you may still receive a form, and you are still responsible for reporting all taxable income.<\/p>\n

Payments received for personal reasons \u2014 such as gifts or reimbursements for shared expenses \u2014 are not considered taxable and should not be reported on a 1099-K. If you receive a 1099-K in error, contact the issuer and request a corrected version with the erroneous amounts removed.<\/p>\n

Houston recommends having a clear accounting system to distinguish between personal and business transactions. \u201cI recommend using an Excel spreadsheet or QuickBooks Online to organize your records,\u201d she says. \u201cA solid accounting system will help ensure you report income accurately on your tax return.\u201d<\/p>\n

How to report 1099-K income on your tax return<\/h2>\n

Form 1099-K can reflect various types of payments, which affect how you report the income on your tax return:<\/p>\n