Understanding Your Form 1099-K

What is Form 1099-K?

A Form 1099-K is an IRS form that reports income you received through a payment app like PayPal,and Venmo, or an online marketplace like Etsy or eBay. You receive a 1099-K for payments you process through payment cards such as credit cards, debit cards, and gift cards.

Ride-share drivers, delivery drivers, and other gig workers may also receive Forms 1099-K from the companies they work with.

The organizations that issue 1099-K forms are officially called payment settlement entities (PSEs), electronic payment facilitators (EPFs), and third-party merchant networks. All of them process payments between one organization or person and another. They send one copy of a 1099-K to the taxpayer (for example, you) and another to the IRS. Additional copies go to the relevant state tax agencies.

People sometimes refer to a 1099-K by its full name: Form 1099-K, Payment Card and Third Party Network Transactions.

Who gets Form 1099-K?

The threshold for issuing Form 1099-K is $20,000 gross processing amount in at least 200 transactions. Total transactions of less than 200 or less than $20,000 annually do not require issuing a 1099-K. However, individual states may mandate the form be issued at lower amounts such as $600.

Anybody who receives income through a payment card, payment app, or online marketplace might receive a 1099-K. This can include:

• Freelancers and independent contractors
• Gig workers
• Solopreneurs
• Babysitters and nannies
• Hair stylists
• Farmer’s market vendors
• And more

You must report all your annual income to the IRS. But third-party networks only need to issue a 1099-K when your payments for the year total 200 transactions and are $20,000 or more. In other words, if you receive $1,500 in payments through your online store, you must report the income, even if you don’t get a 1099-K.

1099-K changes for the 2026 reporting year

As payment-processing apps and gig work have grown more popular, the IRS has revisited some of the rules around 1099-K form. The biggest change is that, starting in 2026, cash tips are reported in Box 1c and included in Box 1a, Gross Payments . The amount of tips in Box 1c may be eligible for the Qualified Tips Deduction.

What if I receive both personal payments and business income through the same app?

If you use payment apps for both personal and business reasons—splitting a lunch tab with a friend one day, accepting payment for a little handyman work the next—you should set up two separate accounts to send and receive money. If you don’t, you will be mixing taxable income and nontaxable reimbursements. That can make a mess of your 1099-K forms and your tax return.

A Jackson Hewitt Tax Pro can help make sure you only report taxable income on your annual tax returns. Keeping accurate records of your income, and how you were paid, will make it easier to do your taxes correctly.

How do I report 1099-K forms on my tax return?

You must report all income you receive on your tax return. Exactly how you report income from a Form 1099-K depends on the type of income and business:

Self-employed people (gig workers, freelancers, independent contractors, etc.) report 1099-K income on Schedule C Profit or Loss from Business.

If your 1099-K income is connected to a partnership, it belongs on the Partnership return (IRS Form 1065). You should give your 1099-K to the party completing the partnership’s return.

Income from the sale of personal property sold for a profit is reported on Form 8949, Sales of Capital Assets, and Schedule D Capital Gains and Losses, then included with Form 1040. You do not report personal property sold for a loss.

Rental income should be reported on Schedule E, Supplemental Income and Loss, or Schedule C, depending on your situation.

Choosing the right form and completing it correctly can be confusing. A Jackson Hewitt Tax Pro will help make sure you do it right.

What do the boxes on Form 1099-K mean?

Box 1a reports your gross receipts, which is all the money you were paid by the entity. It does not account for refunds, credits, processing fees, or other fees you paid to access your money, but it does include cash tips

Box 1b reports "card not present" (CNP) transactions. It means the payer did not swipe, scan, or tap the card in your presence, which is often the case when you earn income online. Box 1a and Box 1b will likely be the same if you process all your payments online. If you also sold goods or services in a store, conference booth, market stall, or other physical location, and accepted credit cards, Box 1b is likely to report a different figure than Box 1a.

Box 1c reports cash tips received through the processing entity and included in Box 1a.

Box 3 reports the number of transactions the third party issuing the 1099-K processed for the taxpayer for the year. This information does not affect your tax return. It may be helpful for your business records or analysis.

Box 4 reports any federal income tax that has been withheld. 1099 payments generally do not have federal income tax withheld, but you may be subject to backup withholding if you didn’t provide your tax identification number when you set up your payment-processing account with the organization issuing the 1099-K. Some states and localities mandate state income tax withholding on electronic processor and third-party card payments. This amount is reported in Box 8.

Boxes 5a through 5l break down the gross pay received per month.

What if I received other 1099-MISC or 1099-NEC Forms that report the same income as Form 1099-K?

Form 1099-K must be issued to all taxpayers who meet the threshold. And it is possible to have the same income reported on both Form 1099-K and a 1099-NEC.

For example, let’s say a business pays you via PayPal for some landscaping work and you meet the $20,000 total and 200 transaction reporting threshold. PayPal will send you a 1099-K that includes that transaction. The business may also issue a 1099-NEC reporting the income they paid you. Though rare, you end up with two separate forms including the same payment. You need to report and only report the income once on your tax return. This is the good reason you should independently track all your income and expenses to prevent duplication on your return.

A Jackson Hewitt Tax Pro can help make sure you do not double-report, or underreport, your income. We are available all year to answer your 1099-K income and reporting questions, and to make sure you file your taxes correctly and get your biggest possible refund.

About the Author

Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 35 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.

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