Disclaimer
This blog post is provided for educational and informational purposes only.
It does not constitute tax, legal, accounting, or financial advice and should not be relied upon as a substitute for professional counseling tailored to your specific situation.
Always consult a qualified tax advisor or legal professional before making decisions based on this content.
Use of this site or information herein does not create a professional relationship between you and BadranTax LLC or its principals. Any reliance on the material is solely at your own risk.
While we strive to provide accurate, up-to-date information, BadranTax LLC makes no warranties, express or implied, regarding accuracy, completeness, or suitability of the content.
Links to external websites are provided for convenience only. BadranTax LLC does not endorse and is not responsible for the content or practices of third-party sites.
BadranTax LLC and its affiliates expressly disclaim all liability for any actions taken or not taken based on this information.
If you sell on platforms like eBay, PayPal, Venmo, Etsy, or Facebook Marketplace, there’s important news you need to know.
In a major win for taxpayers:
Congress has officially reinstated the original $20,000 and 200 transaction threshold for IRS Form 1099-K reporting.
This change rolls back a previously planned IRS rule that would have lowered the threshold to just $600.
That rule would have triggered tax forms for millions of Americans selling used or personal items online—often at a loss and with no actual tax liability.
Thanks to public pressure and advocacy from tax professionals and citizens alike, the change was signed into law as part of a new legislative package in 2025.
What Is a 1099-K Form?
The IRS Form 1099-K is used to report income received through third-party payment processors, such as:
- PayPal and Venmo
- Cash App (business accounts)
- eBay, Etsy, Poshmark, and other marketplaces
- Stripe, Square, and other online payment gateways
Previously, you would only receive a 1099-K if you processed more than $20,000 in payments and had over 200 transactions in a year.
However, the American Rescue Plan Act of 2021 introduced a much lower $600 threshold—originally set to take effect in 2023, but delayed multiple times due to backlash and implementation concerns.
What’s New: Reporting Threshold Repealed
As of mid-2025, the $600 reporting threshold has been repealed and the IRS will revert to the original standard:
New Threshold Reporting Rules for 2025:
- $20,000 in gross payments
- AND more than 200 transactions
- Applies to goods and services (not personal reimbursements)
This is a significant relief for casual sellers, gig economy workers, and people clearing out personal belongings.
Many of these individuals were never supposed to be taxed on the items they sold—especially when sold at a loss—but the $600 rule created confusion and fear of IRS scrutiny.
Why This Matters for Casual Sellers
Many people use online marketplaces to sell second-hand goods like clothes, electronics, furniture, or collectibles.
These sales typically involve items sold for less than their original purchase price, meaning there’s no taxable gain.
However, under the now-repealed $600 rule, even a one-time sale could have generated a 1099-K—and the burden of proving that the transaction wasn’t taxable would fall on the taxpayer.
By restoring the $20,000/200 transaction threshold, the IRS reduces unnecessary paperwork and helps taxpayers avoid mistaken income reports, audits, or penalties.
Who Will Still Receive a 1099-K?
Not everyone is exempt. If you’re earning significant income from selling goods or services online, you may still get a 1099-K in the following cases:
- Your total payment volume exceeds $20,000 AND you process more than 200 transactions
- You run a business or side hustle through platforms like Etsy, Amazon, or Shopify
- You accept payments for services through PayPal, Venmo (business accounts), or Stripe
Important: Even if you don’t receive a 1099-K, you are still legally required to report all taxable income. This includes profits from reselling, business activity, and freelance services.
What About Personal Reimbursements?
Another key clarification: personal payments (like splitting a dinner bill or paying rent to a roommate) are not reported on 1099-K forms, as long as you mark the transaction as “friends and family” on apps like Venmo or PayPal.
Business or service-related transactions must be labeled properly, or they may be incorrectly flagged.
How This Impacts 2025 Tax Filing
Taxpayers who sell used personal items occasionally—such as through eBay or Facebook Marketplace—should not receive a 1099-K in early 2026 unless they meet both the $20,000 and 200 transaction requirements.
This will reduce the number of incorrect or confusing tax forms issued next tax season.
Next Steps for Taxpayers
- Keep good records of all online sales, especially if you resell for profit
- Distinguish between hobby selling and business activity
- Understand which payments are considered income and which are not
- Use payment tags correctly on apps like Venmo and PayPal
If you’re unsure whether your online selling qualifies as income or not, a tax professional can help clarify the rules and ensure accurate filing.
Helpful Resources
Frequently Asked Questions (FAQ)
Will I still get a 1099-K if I sell one item for over $600?
No. As of mid-2025, the IRS will only issue a 1099-K if you exceed both $20,000 in gross payments and 200 total transactions for the year.
Do I have to report income from online selling?
If you sell items for a profit—such as flipping or running a side hustle—you must report that income, even if you don’t receive a 1099-K.
Selling personal items at a loss typically does not generate taxable income.
What if I already received a 1099-K in error?
You should review the details and consult a tax professional. If the form reports non-taxable activity, you may need to file a correction or attach a statement with your return explaining the discrepancy.
Can I still receive a 1099-K for personal reimbursements?
Personal payments using “friends and family” options on platforms like PayPal or Venmo are not included in 1099-K reporting.
Only payments marked as goods or services are considered.
When will this new threshold apply?
The restored $20,000 / 200 transaction threshold applies to tax year 2025.
You’ll see this change reflected in the 1099-K forms sent in January 2026.
Amro Badran, EA is the Managing Partner of BadranTax LLC,
Experienced and Trusted Tax Resolution Firm based in New Brunswick, NJ.
With over 40 years of experience and accreditation as a Federal Enrolled Agent, Amro Badran and his team of experts specialize in helping individuals and businesses resolve complex IRS issues and controversies.
