Understanding Form 1099-K “Payment Card and Third Party Network Transactions”

Third party settlement organizations (TPSO) such as Airbnb, PayPal, Venmo, CashApp, etc.  are required to report transactions for goods or services where the total payments received were more than $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and thereafter. Because the reporting threshold dropped from $20,000  to $5,000 in 2024, you may receive a form 1099-K for the first time this year.

You receive a 1099-K if you sell goods, rent property or provide services and:

• Your customers or clients pay you directly by credit, debit or gift card,

• You used a payment app or online marketplace and received payments over $5,000

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 are NOT taxable income.

If you get a Form 1099-K when you shouldn't have, don’t panic! Do this instead:

• Contact the issuer immediately and ask for a corrected Form 1099-K that shows a zero amount

• Keep a copy of the original form and all correspondence with the issuer for your records

• Don't wait to file your taxes. File even if you can't get a corrected Form 1099-K and note the error on your tax return

For more tax tips, book an appointment with us at www.lobecpa.com and we will help you tax plan and build wealth!