This AIM Financial blog covers IRS Form 1099-K: Payment Apps, Online Marketplaces, and What Reported Payments Mean for Your Taxes. One important update: the federal reporting threshold for third-party payment apps and online marketplaces reverted to more than $20,000 in payments and more than 200 transactions under the law enacted in 2025. Payment-card transactions have different reporting rules, and the reporting threshold does not determine whether income is taxable.

Have you received money through PayPal, Venmo, Cash App, an online marketplace, or a credit card processor? If you sell products, provide services, operate a small business, or occasionally sell personal belongings online, you may encounter IRS Form 1099-K, Payment Card and Third Party Network Transactions.

Understanding this form is important because the total payments reported may not equal your taxable income. Some payments represent business revenue, while others may involve personal property sales, refunds, reimbursements, or transactions that are not taxable income.

For taxpayers and small business owners in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan, AIM Financial can help explain Form 1099-K and determine how payment transactions should be handled when preparing a federal and Michigan income tax return.

What Is IRS Form 1099-K?

Form 1099-K is an information return used to report certain payments processed through payment cards, payment apps, and online marketplaces.

You may receive this form if you accept payments for goods or services through a qualifying payment platform. Examples include payments from customers who purchase products, clients who pay for freelance work, or customers who pay your business through a credit card processor.

The payment platform generally sends a copy to you and reports the information to the IRS. This allows the IRS to compare payment information with what taxpayers report on their income tax returns.

However, receiving Form 1099-K does not automatically mean the entire amount reported is taxable income. You must consider what the payments were for and review your supporting records.

The IRS provides additional information on its official About Form 1099-K page.

Who Receives Form 1099-K?

You might receive Form 1099-K if you:

• Sell products through an online marketplace.
• Accept credit or debit card payments for your business.
• Provide freelance, consulting, or other services and receive payments through an applicable platform.
• Operate an online store or small business.
• Sell personal belongings through an online selling platform.
• Receive qualifying payments through a payment app or third-party payment network.

The reporting rules depend on how the payment was processed.

For payment-card transactions, there is generally no minimum dollar threshold for reporting. For third-party settlement organizations, such as qualifying payment apps and online marketplaces, the federal threshold reverted to more than $20,000 in gross payments and more than 200 transactions under legislation enacted in 2025.

A payment platform may still issue Form 1099-K when the amounts or number of transactions are below that threshold. Other reporting requirements may also apply.

Most importantly, these thresholds determine when certain organizations must report payments. They do not determine whether your income is taxable. You may have to report taxable income even if you never receive Form 1099-K. <Cite refs={[“turn165481search1″,”turn165481search3”]}/>

Does Form 1099-K Mean You Owe Taxes?

Not necessarily. The tax treatment depends on the underlying transactions.

Consider these common examples.

Example 1: A small business sells products.

Suppose your business receives $12,000 in customer payments through an online marketplace. You may have business income to report, but the taxable profit is generally determined after accounting for applicable business expenses and other tax rules.

Example 2: You sell used furniture.

Suppose you sell a used dining table for $150 even though you originally paid $500. The sale generally produces a personal loss, which is not deductible. However, if you receive Form 1099-K for the transaction, you may need to report it appropriately so the gross payment is not mistakenly treated as taxable profit.

Example 3: You sell a collectible for a profit.

Suppose you sell a collectible for $900 that you originally purchased for $400. The $500 difference may be taxable gain, subject to the applicable rules and any relevant adjustments. Collectibles can be subject to special capital-gain tax rules.

These examples illustrate why it is important to examine each transaction instead of treating the total on Form 1099-K as your taxable income. <Cite refs={[“turn165481search5”]}/>

Are Payments From Friends and Family Taxable?

Money received through a payment app is not automatically business income.

Examples of personal payments that generally are not taxable income include:

• A friend reimbursing you for dinner.
• A roommate paying their share of household expenses.
• A family member sending you a birthday gift.
• Someone repaying money you previously lent them.

These payments are different from money received for selling products or providing services. Personal gifts and reimbursements generally should not be reported as payments for goods and services.

If a payment app mistakenly includes personal transfers in a Form 1099-K, review the transaction history and contact the platform about correcting the form when appropriate. Keep documentation showing what the payments represented.

It is helpful to use payment-app features that distinguish personal transfers from business transactions whenever available. <Cite refs={[“turn165481search3″,”turn165481search6”]}/>

What Does the Gross Payment Amount on Form 1099-K Mean?

The gross payment amount generally represents the total value of reportable payments processed through the payment network. It may not equal the amount deposited into your bank account.

For example, the total can differ from your actual receipts after accounting for:

• Payment processing fees.
• Customer refunds.
• Chargebacks or credits.
• Discounts.
• Shipping amounts or other transaction details.

Suppose a business processes $10,000 in customer payments and pays $300 in processing fees. The amount deposited may be less than $10,000, but the fees and other adjustments must be accounted for correctly when calculating income and deductible expenses.

Do not simply subtract every difference without reviewing your records. Reconcile Form 1099-K with platform statements, bank deposits, sales records, refund reports, and bookkeeping information. <Cite refs={[“turn165481search5”]}/>

Where Do You Report Form 1099-K on Your Tax Return?

There is no single line on an individual tax return where every Form 1099-K belongs. The proper reporting method depends on the type of transaction.

• Sole proprietors and many self-employed individuals: Business payments generally are reported on Schedule C, Profit or Loss From Business.
• Personal property sales: The tax treatment depends on whether the item was sold at a gain or loss. Taxable gains generally are reported using Form 8949 and Schedule D when applicable.
• Rental activity: Income may belong on Schedule E or, in certain circumstances, Schedule C.
• Corporations and partnerships: Payments generally must be accounted for on the applicable business tax return.

The goal is to report the underlying income accurately, account for eligible expenses, and avoid reporting the same payment twice.

For more details, consult the IRS resource What to Do With Form 1099-K.

What Records Should You Keep?

If you receive Form 1099-K, gather the documents needed to explain the payments.

Useful records include:

• The Form 1099-K itself.
• Payment-platform transaction histories.
• Bank statements and deposit records.
• Sales receipts and invoices.
• Refunds, credits, and chargeback records.
• Business expense receipts and processing fees.
• Purchase records for personal items sold.
• Records distinguishing personal transfers from business payments.

Good records help establish whether payments represent taxable income, personal transfers, business revenue, or proceeds from selling personal property.

How AIM Financial Can Help With Form 1099-K

Form 1099-K can create confusion for taxpayers who use payment apps personally and for small business owners who receive customer payments through several platforms. The form may show a large gross amount even when the actual taxable profit is much smaller.

AIM Financial helps individuals, freelancers, and small business owners in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan prepare their federal and Michigan income tax returns.

If you received Form 1099-K and are unsure how to report the payments, contact AIM Financial for tax preparation assistance. We can help you organize your records, review the information you received, and determine how the transactions should be reflected on your return.

Do not ignore Form 1099-K simply because you believe the payments were not taxable. Keeping records and addressing the form correctly can help prevent reporting errors and unnecessary tax complications.

Final Thoughts

IRS Form 1099-K is designed to report certain payments processed through payment cards and third-party payment networks. It does not automatically establish how much taxable income you earned.

Understanding the difference between gross payments, business revenue, deductible expenses, personal transfers, and gains from personal property sales is essential for accurate tax reporting.

For assistance with Form 1099-K, small business income, online marketplace sales, or federal and Michigan income tax preparation, contact AIM Financial, serving Grand Rapids, Kentwood, Wyoming, and West Michigan.