The 1099-K Threshold Is Dropping Again—Are You Ready for 2025?

If you receive payments through popular platforms like PayPal, Venmo, Etsy, or other third-party payment processors, here’s an important heads-up: the IRS is steadily tightening its reporting requirements for these transactions.

Starting in 2024, these platforms must issue a 1099-K form if you receive over $5,000 in payments. However, in 2025, this threshold will be significantly lowered to just $2,500. Then, in 2026, it’s planned to drop even further to only $600.

This change means that many more people will receive a 1099-K form, even for relatively small side hustles, occasional sales, or part-time gigs that previously might not have triggered reporting. With these expanded reporting obligations, there will likely be increased scrutiny from the IRS.

To stay ahead and avoid any surprises, here are some crucial steps you should take now:
✅ Track every payment you receive, no matter how small or insignificant it may seem
✅ Keep personal and business transactions separate on your payment apps to maintain clear records
✅ Save all receipts and relevant documentation to verify your income sources
✅ Consult with a tax professional to ensure you’re fully prepared for tax season and to avoid unexpected audits

Remember, receiving a 1099-K is not a tax bill itself, but it does inform the IRS about what you have earned. If there are discrepancies or if income is missing from your return, this could trigger an audit—even if it is an honest mistake or misunderstanding.

At Tax Pros HQ, we specialize in helping gig workers, resellers, and side-hustlers remain compliant and fully prepared for these evolving tax rules. Don’t wait until you’re caught off guard—start organizing your financial records now to stay on top of the changes.

We’re here to support you every step of the way.