What is the new 1099-K threshold for 2025?

For the 2025 tax year, you'll receive a 1099-K form only if you have over $20,000 in gross payments and more than 200 transactions on a third-party platform.

How does the IRS 1099-K change affect freelancers?

The new threshold eases the tax burden for freelancers with side hustles, reducing confusion from previous lower reporting requirements.

Was there confusion about the 1099-K form before?

Yes, previous thresholds like the $600 rule and the interim $5,000 rule caused significant confusion for many taxpayers.

Home / Business and Economy / New 1099-K Threshold Eases Tax Burden

New 1099-K Threshold Eases Tax Burden

10 Dec

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Summary

New $20,000 and 200-transaction threshold for 1099-K forms begins tax year 2025.
IRS policy change offers relief to online sellers and freelancers with side hustles.
Previous $600 threshold and later $5,000 threshold caused significant taxpayer confusion.

Online sellers and freelancers in the U.S. can anticipate a significant change to tax reporting requirements beginning with the 2025 tax year. The IRS has revised the threshold for Form 1099-K, now requiring individuals to receive over $20,000 in gross payments and conduct more than 200 transactions on a single third-party platform to receive the form. This adjustment aims to simplify tax processes for many.

Previously, a much lower $600 threshold caused widespread confusion and led many taxpayers, including those with occasional side gigs like ride-sharing or online sales, to receive unexpected tax forms. The IRS had previously announced a $5,000 threshold for 2024 as an interim measure, attempting to phase in stricter reporting.

This latest adjustment, championed by groups like the National Taxpayers Union Foundation, is seen as a win for simplicity and common sense in tax reporting. It ensures that only those more substantially engaged in commerce through third-party platforms will be subject to the additional tax documentation, easing burdens on casual earners.