Charles Trautman, EA · Since 1969

Form 1099-K: Venmo, PayPal, Etsy, and eBay income

The form tells the IRS what came in through the app. It doesn’t tell anyone what was taxable. That part is up to you.

Payment apps and online marketplaces report what they pay out, and the IRS gets a copy. For 2026 the threshold is back where it was for years: more than $20,000 and more than 200 transactions. But the threshold only decides whether a form shows up. Whether the money is taxable depends on what it was for, which the app cannot know.

Current as of October 2026 · Figures are for tax year 2026

What the form is The threshold What’s taxable When the form is wrong Business, hobby, records Colorado Questions

What a 1099-K is and who sends it

A report of gross payments, from the company that moved the money.

Form 1099-K comes from a payment settlement entity: Venmo, PayPal, Cash App, Square, Stripe, and the marketplaces that process payments for sellers, such as Etsy, eBay, Amazon, Poshmark, StubHub, Uber and DoorDash. If a company stands between a buyer and you and settles the payment, it files the form. One copy goes to you and one to the IRS.

The number on the form is gross: every dollar that came through for goods and services, before the platform’s fees, refunds you gave, shipping, and the cost of whatever you sold. Nothing on a 1099-K is profit. It is a count of money in.

The IRS computer matches the form against your return. If $23,000 of gross payments is reported under your Social Security number and your return shows nothing, a notice follows a year or more later proposing tax on the whole $23,000. The answer is to report what the form represents, with the expenses and basis that turn gross receipts into actual income.

Behind the scenes

Before we touch the total on a 1099-K, we read the month-by-month breakdown on the form. Twelve roughly equal monthly amounts are usually a roommate’s rent or a family member paying back a loan. Uneven amounts peaking in November and December are usually a seller. The form doesn’t say which; the pattern does, and it tells us what to ask before anything goes on Schedule C.

The threshold for 2026

Restored by the 2025 law after several years of confusion.

When a platform must send a Form 1099-K
Rule	Threshold
Gross payments for goods and services in the year	More than $20,000
and number of transactions in the year	More than 200
Payments from a business to a contractor (Form 1099-NEC or 1099-MISC), 2026 payments	$2,000 or more

Both parts of the 1099-K test must be met; $30,000 across 150 transactions does not require a form. Some platforms send one anyway. The 1099-NEC threshold applies to a business paying you directly, not to a payment app.

The law had been scheduled to drop the threshold to a small fraction of this, and the IRS delayed it year after year. The 2025 tax law wrote the old threshold back into the statute. For 2026 most casual sellers and nearly everyone who uses an app to pay friends will not get a form.

Here is the part that gets lost: the threshold has nothing to do with what is taxable. A woodworker who sold $8,000 of furniture through Etsy in 40 sales will not get a 1099-K and still owes tax on the profit. The form is a reporting rule for the platform, not a tax exemption for the seller.

Personal payments, personal items, and real income

The same app, the same form, four different answers.

What a payment is and where it goes on the return
The payment	Taxable?	Where it is reported
Friends splitting dinner, a roommate’s share of rent, a gift from Grandma, a loan paid back	No	Nowhere, unless it lands on a 1099-K by mistake (see below)
Selling your own used couch, bike or clothes for less than you paid	No; the loss is not deductible either	Shown and backed out so the IRS can match the form
Selling a personal item for more than you paid: a watch, a collectible, concert tickets above face	Yes, as a capital gain	Form 8949 and Schedule D
Buying things to resell, or selling what you make, or getting paid for work	Yes, on the profit, plus self-employment tax	Schedule C
Occasional sales of a hobby, not run to make money	Yes, on the gross, with no expense deduction	Schedule 1, other income

A gain on a personal item is long-term if you owned it more than a year. Collectibles such as coins, art and cards are taxed at a rate of up to 28%. Capital gains rates.

The second row is the common one. Most of us sell our old things for less than we paid. Nothing is owed and the loss cannot be deducted; the only work is proving it, which is why we ask people to note what an item cost when they list something expensive. The third row surprises people: reselling sold-out tickets or an inherited coin collection at a gain is a taxable sale even if it happened once. The fourth row is a business, which deducts its costs and pays self-employment tax on what is left.

When the 1099-K is wrong

Or when it is right about the money and wrong about what it was.

Personal transfers mixed in

The usual cause is one account used for both. Someone sells on Marketplace and also collects the family’s share of a vacation rental through the same Venmo. The platform reports the total. The fix is on the return: the full amount is shown so the IRS computer finds its match, and the personal portion is backed out with a short description. Simply leaving the personal part off is what generates the notice.

Going forward, keep a separate account, or at least mark personal payments as “friends and family” in the app, which most platforms exclude from the form.

The amount is wrong, or it isn’t yours

A form that double-counts, includes refunds you paid back, or carries your Social Security number for someone else’s account should be corrected by the issuer. Ask the platform for a corrected form. If it won’t fix it before the deadline, we file with the correct figure and an explanation; the return doesn’t wait for the platform.

Gross is right, but the profit is small

Not an error. A reseller with $25,000 of gross sales may have $18,000 of inventory cost, fees and shipping; the return shows the $7,000 of profit. Records are the only thing that turn the gross into the profit, and without them the gross is what gets taxed.

Business or hobby, and the records that settle it

The answer changes which schedule you file and whether your costs count.

Business

Run to make a profit, with regular activity and attention to costs. Reports on Schedule C, deducts expenses and inventory, pays self-employment tax, and can show a loss in a bad year. Business or hobby?

Hobby

Done for enjoyment, with sales as a byproduct. Income is reported in full as other income, and under current law none of the expenses are deductible. A hobby with large sales is an expensive way to not be a business.

What to keep

For a reseller: what you paid for each item and when, platform fees, shipping, mileage, and a year-end inventory count. For personal items: the receipt or a note of the cost. A spreadsheet is enough; a shoebox is not.

Got a 1099-K and not sure what to do with it?

Bring the form and whatever records you have. We’ll sort the personal from the taxable and put each piece where it belongs. Call 303-734-1040.

The Colorado side

Nothing separate to do.

Colorado starts from federal taxable income and taxes it at a flat 4.40%. There is no state 1099-K rule, no state threshold, and no separate schedule. Whatever ends up as profit on your federal return flows into Colorado income automatically, a personal sale at a loss stays out of both, and capital gains are taxed as ordinary income at the flat rate. Sales tax on marketplace sales is a separate question, and usually the marketplace’s job.

Common questions

I stayed under $20,000. Do I still have to report the income?

Yes, if it was income. The threshold decides whether the platform sends a form, not whether you owe tax. Profit from selling goods or services is reportable from the first dollar, form or no form.

I sold my old furniture on Marketplace for $1,500. Do I owe tax?

Not if you paid more than $1,500 for it, which is almost always the case with used furniture. The loss isn’t deductible either. Keep a note of what the pieces cost in case a form arrives.

I got a 1099-K for an account I closed years ago, or that isn’t mine.

Ask the issuer for a corrected form. If the account isn’t yours at all, that may be identity theft, and an IRS Identity Protection PIN is worth setting up. Either way, bring the form in so the return addresses it.

Selling online, driving, or getting paid through an app?

We prepare returns for side businesses, resellers and gig workers, and we’ll tell you honestly whether what you have is a business, a hobby, or just your old couch. In person in Lone Tree or remotely, year round.

Start Here 303-734-1040

Sources and where to check

This page is general information, current as of October 2026, and is not advice about your situation. Tax law changes every year. Confirm anything that matters to you with us or at the sources below.