The federal 1099-K threshold for 2026 is back to more than $20,000 and more than 200 transactions. Some states use a lower number, and the gross figure on the form is almost always higher than the sales in your books, because it counts payments before refunds and fees.
The federal 1099-K threshold for 2026
A Form 1099-K reports the payments a payment company handled for you during the year. Two kinds of company send one:
- Payment apps and online marketplaces (third-party settlement organizations, in IRS terms) send a 1099-K when they paid you more than $20,000 across more than 200 transactions in the year.
- Card processors send one for payments you took by credit or debit card, with no minimum amount and no minimum number of transactions.
The $20,000 and 200-transaction test is the old rule, restored. A 2021 law would have lowered it to $600, the IRS delayed that change more than once, and the 2025 tax law known as the One, Big, Beautiful Bill (P.L. 119-21) put the original test back, retroactively. So for 2026, a seller with $14,000 of marketplace sales, or $30,000 spread over 150 orders, should not get a federal 1099-K from that marketplace.
None of this changes what is taxable. Income is income whether or not a form arrives; the threshold only decides when the platform has to report it.
Some states use a lower threshold
The federal change did not reach state rules. The IRS itself warns that your state may have a lower threshold, so you can receive a 1099-K for a year well under $20,000. Virginia, for example, has platforms send a 1099-K to sellers with a Virginia address once they are paid $600 or more in the year, and Massachusetts uses $600 as well. If you are not sure about yours, your state revenue department’s website will say. Treat a state-triggered 1099-K exactly like a federal one: match it to your books and keep the working.
Why your 1099-K is higher than your sales
Because it is a gross figure. The IRS is explicit that the amount on a 1099-K is not adjusted for fees, credits, refunds, shipping, discounts or cash equivalents. Your books are, or should be. The usual reasons the two numbers differ:
- Refunds and returns. The customer paid, the form counts it, and then you gave the money back.
- Platform and payment fees. The form shows what the customer paid, not the smaller payout that reached your bank.
- Discounts, credits and shipping adjustments. None of them come off the gross amount.
- More than one form. Each payment company sends its own, so a seller on two marketplaces who also takes card payments can get three. Add them up before you compare.
- Personal payments in the same account. Selling your own used things, or being paid back by a friend, through a business account muddies the total.
How to match a 1099-K to your books
The goal is a short bridge from the gross figure on the form to the payouts in your bank account, with every step explained. If your books record each platform the right way, with gross sales, refunds and fees on separate lines (the method in our guide to recording Shopify sales in QuickBooks), the bridge almost writes itself.
- Collect every 1099-K for the year, from each marketplace, payment app and card processor.
- Download each platform’s annual sales or payout report, which shows gross sales, refunds and fees.
- Start from the gross figure on the form and take off refunds. That should equal sales in your books.
- Take off fees. That should equal the payouts you can see arriving in the bank.
- Write down any difference you cannot explain, and look at it before you file.
| Line | 2026 |
|---|---|
| Gross payments on the 1099-K | $68,400 |
| Refunds to customers | ($3,150) |
| Sales in the books | $65,250 |
| Marketplace and payment fees | ($6,840) |
| Payouts to the bank | $58,410 |
The form says $68,400; the bank received $58,410. Both are right. The return starts from the same gross amount the IRS sees, then shows the refunds and the fees, so the numbers tie back to the form.
Example only: a made-up business. The figures add up but belong to no real seller.
Selling on more than one channel? Build the same bridge for each platform, then add them up. Our page on bookkeeping for online stores shows how we keep multi-channel sellers split this way month to month.
Personal items vs business sales
If you sold your own used things at a loss, such as an old couch or a phone, that is not business income. The loss itself is not deductible, but the IRS FAQs show how to report the sale on Schedule 1 (Form 1040) so the 1099-K amount has no net effect on your income instead of being taxed.
Payments from friends and family are different again. Gifts and reimbursements for shared costs are not payments for goods or services, so they do not belong on a 1099-K at all. The simplest protection is a separate account for the business, so personal money never runs through the platform you sell on.
What to do in January
- Watch for forms by email and in each platform’s tax or documents section
- Check the name and tax ID on each form against your own records
- Match each form to your books with the bridge above
- If a form is wrong, contact the filer named in its upper left corner and ask for a corrected one
- Keep the corrected form and your correspondence with the filer
- Give every form, and the bridge, to whoever prepares your return
If your platform sales went in as one lump of revenue, January is the month you find out. Add us as your accountant and we will show you where the books and the forms disagree, in about 48 hours, with a free books review. Nothing in your books changes.
Frequently asked questions
Do I have to report income if I do not get a 1099-K?
Yes. Income is taxable whether or not a form is issued. The threshold only decides when a platform has to send a 1099-K; it does not create a tax-free amount. Report your sales from your own records.
Why is my 1099-K higher than my sales?
Because it shows gross payments: the full amount customers paid, before refunds, fees, credits, discounts and shipping adjustments. Your books record sales after refunds and show fees as an expense. The worked example above shows how the two tie together.
Does Etsy or eBay send a 1099-K?
Yes, once you pass the threshold that applies to you. Both marketplaces process payments for their sellers, so they are the ones who issue the form. In a state with a lower threshold, it can arrive for much smaller amounts than the federal $20,000.
What if my 1099-K is wrong?
Contact the filer, the company named in the upper left corner of the form, and ask for a corrected one. Keep the corrected form and your correspondence. If a correction does not arrive in time, the IRS says not to wait: you can file and zero out the error on your return.
Do payments from friends and family count?
No. Gifts and reimbursements for shared costs are not payments for goods or services, so they do not belong on a 1099-K. If they show up on one, ask the filer to correct it, and keep personal payments out of your business account so the question does not come up.