Online sellers and freelancers in the U.S. have found changes to the 1099-K reporting threshold headache-inducing at best over the past couple of years, but a recent change in IRS policy will come as a relief to many.

Congress enacted a rule to change the 1099-K threshold for your 2025 taxes, meaning you should only receive a Form 1099-K if you receive more than $20,000 in gross payments on third-party networks or payment apps and you also conduct more than 200 transactions on a single platform within the tax year (1).

This is good news for those who have a side hustle like driving Uber or casually sell items online. The threshold should ensure that only those who are seriously engaged in selling goods or services through a third-party platform are responsible for the extra tax paperwork, and are likewise taxed appropriately on their profit.

Here’s the backstory on the Form 1099-K confusion, and why you can now rest easy if you’re looking to make some casual money on the side — without having to worry about extra tax forms.

Initially, the “$600 rule” statute that changed the requirements for 1099-K forms meant that all taxpayers who earned $600 or more on platforms like PayPal, Venmo or Cash App would have to complete the additional form and be taxed on that income. However, in an effort to soften the impact on both these third-party companies and on taxpayers, the IRS announced a $5,000 threshold for 2024 taxes — a way to “phase in” the implementation of the $600 threshold (2).

This caused confusion for many over the past few tax seasons, and many taxpayers received 1099-K forms they weren’t expecting.

The National Taxpayers Union Foundation (NTUF) lobbied hard against the changes, arguing that a drastic drop in the reporting threshold would cause the resulting confusion about forms and reporting, and could also trigger taxes for things like receiving money transfers from friends, with taxpayers having to report higher incomes than they really earned.

“The 1099-K course correction is a big win for transparency, simplicity and common sense,” wrote Demian Brady, vice-president of research at NTUF (3).

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