IRS Reinstates $20,000 / 200-Transaction Threshold For Form 1099-K

The IRS has reinstated the higher reporting threshold for Form 1099-K, reversing a change made by the Biden administration. This form is issued to individuals earning money through gig work or online sales by third-party settlement organizations. Previously, a Form 1099-K was required only if a seller received over $20,000 and made at least 200 transactions. The American Rescue Plan Act lowered this threshold to $600, sparking criticism from taxpayers and platforms. The IRS had attempted a phased-in approach to the lower limit, but the One Big Beautiful Bill Act permanently repealed these reductions. Now, Form 1099-K is issued only when gross payments exceed $20,000 and the transaction count surpasses 200. However, some states maintain their own lower reporting thresholds. Importantly, all income remains taxable regardless of whether a Form 1099-K is received. The Coalition for 1099-K Fairness applauded the rollback, stating it brings clarity and reduces unnecessary scrutiny. Personal transactions like gifts and reimbursements should not trigger Form 1099-K reporting. Taxpayers receiving an incorrect form should contact the issuer for a correction.