The Chronicles Of Grant County
Updates On Tax Form 1099-K For 2025
Changes are coming for people who received income through third-party settlement organizations in 2024. (The image was provided courtesy of the IRS.)
The Internal Revenue Service (IRS) will be provided with more complete information about income earned by people who utilized third-party settlement organizations in 2024.
If someone received $5,000 or more through third-party settlement organizations during Year 2024, they will be receiving a Form 1099-K detailing those payments. That Form 1099-K is to be sent to them in early 2025. The IRS will also get a copy of their Form 1099-K in early 2025.
"Form 1099-K is a report of payments you got for goods or services during the year from: credit, debit, or stored value cards such as gift cards (payment cards) [and/or] payment apps or online marketplaces, also called 'third-party settlement organizations' or 'TPSOs,'" according to a statement from the IRS. "These organizations are required to fill out Form 1099-K and send copies to the IRS and to you."
According to the IRS, "third-party settlement organizations," also called "third-party payment organizations," include many popular payment apps and online marketplaces. A few examples of these digital platforms are Airbnb, Block, eBay, Etsy, Eventbrite, Mercari, Poshmark, Rover, StubHub, Ticketmaster, and Vrbo.
The IRS explained in a statement that income can include funds received for "goods you sell, including personal items such as clothing or furniture; services you provide; [and] property you rent."
The statement from the IRS continued by noting that "payments can be made through any: payment app, online community marketplace, craft or maker marketplace, auction site, car sharing or ride-hailing platform, ticket exchange or resale site, crowdfunding platform, [and] freelance marketplace. If you accept payments on different platforms, you could get more than one Form 1099-K."
Personal payments from family and friends, though, are not considered income, according to a statement from the IRS, when "money you received from friends and family as a gift or repayment for a personal expense should not be reported on a Form 1099-K. These payments aren't taxable income."
"For example: Sharing the cost of a car ride or meal, receiving money for birthday or holiday gifts, or getting repaid by a roommate for rent or a household bill," the statement from the IRS continued. "Be sure to note these types of payments as non-business in the payment apps when possible."
The parameters for reporting funds paid to individuals through these types of digital platforms are scheduled to change again in coming years.
Forms 1099-K will be issued to people who received more than $2,500 in Year 2025, while Forms 1099-K will be issued to people who received more than $600 in Year 2026. That requirement is scheduled to then continue for each subsequent calendar year.
Initially, the requirement to have Forms 1099-K issued to anyone who received more than $600 in a calendar year was supposed to be implemented for Year 2022.
The full implementation of this requirement, though, was delayed by the IRS.
In previous years, digital platforms were required to send a Form 1099-K to all individuals who received $20,000 or more AND where those payments involved 200 or more transactions during a calendar year. Both the amount of funds received and the number of transactions had to be met before a Form 1099-K was required to be generated by the digital platforms.
Please note that people who received less than $5,000 through third-party settlement organizations in Year 2024 may still receive Forms 1099-K.
A news release dated November 26, 2024, from the IRS indicated that this may happen if the third-party settlement organizations "…performed backup withholding for a payee during calendar year 2024 must file…a Form 1099-K with the IRS and furnish a copy to the payee."
"Although the IRS is taking a phased-in approach to implementation of the Form 1099-K reporting threshold, companies could still send the form for totals over $600," the IRS noted in a separate statement. "No matter the amount, if you receive payments for selling goods or services or renting property you must report your income."
In other words, whether or not you receive a Form 1099-K (or any other documentation) from the person or entity that paid you money, you are still required to report that income to the Federal government and you are still required to pay taxes due on that income.
It doesn't matter the amount of income earned. There is no minimum amount of income that you don't have to report when you file your Federal income tax form(s).
Whether it's $150 or $600, $5,000 or $20,000, or any other amount of money you may receive – you're required to report it to the Federal government and pay taxes due on the net income.
Please contact the IRS or an accountant, attorney, or another tax professional of your choice if you have questions about the Form 1099-K.
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