The 1099-K in 2026: Thresholds, Timeline and What It Does Not Mean

Every winter, a wave of eBay sellers open an email or a Seller Hub notice and see the words "Form 1099-K" next to a large number. The first reaction is usually a flash of panic: does the IRS think I earned that much, and do I owe tax on all of it? The second is confusion, because the news over the last few years told a muddled story about thresholds of $600, $5,000, $2,500 and $20,000, and nobody seemed sure which one applied.

This guide untangles it. It sets out the threshold history in order, says what the IRS currently states about the number you need to meet, explains what eBay puts on the form and when, and then deals with the part that matters most for your wallet: what a 1099-K does and does not mean, how it connects to Schedule C, what to do with items you sold at a loss, and how to fix a form that is simply wrong. Everything below was checked in October 2026 against IRS and eBay pages, which are listed at the end. Tax rules change, so use the links to confirm anything you are about to rely on.

1. What a Form 1099-K actually is

Form 1099-K, Payment Card and Third Party Network Transactions, is what the IRS calls an information return. In its own FAQ, the IRS describes it as a return used to report certain payments so that people comply voluntarily, and says a filing requirement can be triggered when payments are received for goods or services through a payment settlement entity (PSE). The PSE sends one copy to the IRS and one to you.

The IRS FAQ identifies two kinds of reporter that matter to you. The first settles payment card transactions: credit, debit and stored-value cards, including gift cards. The second is the TPSO, which the IRS defines as the central organization that has the contractual obligation to pay participating payees for third party network transactions, with payment apps that move money between buyers and sellers as an example. When you sell on a marketplace and the marketplace pays you, the marketplace is acting in that second role.

You can receive more than one form in a year, and the IRS says to use all of them, together with your other records, to work out your real tax liability.

2. The threshold timeline, in order

The confusion comes from the fact that the law changed on paper in 2021, and then the IRS and Congress changed what actually applied several times. Here is the sequence, using IRS statements.

A few details are worth stating precisely, because they get garbled in articles.

The $600 threshold, as written into law in 2021, never became the practical rule for marketplace sellers. The IRS fact sheet says that Notices 2023-10, 2023-74 and 2024-85 were issued to provide transition periods and penalty relief for implementing and enforcing the ARPA changes. In November 2023 the IRS announced a delay for 2023 and said it planned a $5,000 threshold for 2024 to phase in the change. Notice 2024-85 then set $5,000 for calendar year 2024 and $2,500 for calendar year 2025 as transition-period levels for IRS enforcement and administration, calling 2025 the final transition period. The October 2025 fact sheet says the OBBB then retroactively reinstated the earlier $20,000 and 200 transactions threshold.

Those $5,000 and $2,500 figures were real IRS transition levels, but treat them as history: the IRS's current FAQ points to the OBBB threshold, not to any interim figure.

Both conditions apply. The IRS wording is that the TPSO is not required to file unless the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200. A seller with $50,000 in 150 transactions is under the transaction count. A seller with 400 transactions worth $12,000 is under the dollar figure. Neither meets the federal TPSO test.

Worth remembering: What the IRS has published is a statement of the current federal reporting rule. It does not promise the figure will stay the same. Before you plan a year around a threshold, open the IRS FAQ and check the date on it.

3. Why you can still get a form below the threshold

A lot of sellers read "$20,000 and 200 transactions" and conclude they will never see a 1099-K. The IRS does not say that. Its FAQ gives several reasons a form can arrive anyway.

• Payment cards have no minimum. The IRS states that there is no threshold amount for payments received through a payment card transaction, and that $0.01 in card payments could produce a form. If a customer pays you directly by card through a processor, the processor reports regardless of volume.
• A TPSO may send one early. The IRS says the federal threshold is a reporting requirement for TPSOs, but a TPSO may still send a form for goods or services payments below it.
• Other settlement entities, such as merchant acquiring entities, do not have a de minimis threshold.
• Backup withholding. If a TPSO performed backup withholding for a payee during the prior year, the IRS says it must file Form 945 and a Form 1099-K and give the payee a copy, even below the thresholds. eBay's help page also lists sellers who had backup withholding applied among those who receive a form.
• State thresholds. The IRS says your state may have a lower reporting threshold for TPSOs, which could mean a form even when you were under the federal figure.

On the state point, eBay's seller center tax information page lists Arkansas, the District of Columbia, Illinois, Maryland, Massachusetts, Missouri, Montana, New Jersey, Vermont and Virginia as having lower thresholds, and says Vermont and Massachusetts apply a lower threshold regardless of transaction count. That page describes the 2025 tax year, and state laws change, so confirm with your state revenue department before relying on the list. Federal and state rules are separate: whether a state requires you to report or pay tax on something is decided by the state, not by the federal 1099-K threshold.

4. What eBay reports, and when

eBay's help page on Form 1099-K says you receive a form if you exceed $20,000 in gross payments and more than 200 transactions, and the seller center page adds that the form then covers all your sales transactions for the year, not only the ones above the line. eBay also says that sellers who had backup withholding applied are eligible. The key facts, as eBay states them:

• Timing. eBay provides the form by January 31 for the previous calendar year. An electronic copy is available in Seller Hub and My eBay, and a paper copy is available if you turn off electronic delivery on your Taxes page.
• Gross, unadjusted amount. The gross figure does not subtract credits, discounts, fees, refunds or other adjustments. Sales tax and canceled transactions are excluded. The IRS definition is consistent with this: the regulation described in Notice 2024-85 defines "gross amount" as the total dollar amount of the aggregate reportable payment transactions, without regard to adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts or any other amounts.
• Processing date. eBay says the amount is based on when it processes the funds, not on when they reach your bank.
• Multiple accounts. Totals are combined across accounts tied to the same tax ID. If the combined totals meet the limits, you receive a form for each account, even an account that alone would not have qualified.
• Other providers. eBay notes that if PayPal or another payment provider processed some payments and itself met the thresholds, you may get a separate form from that provider.
• Name matching. The name on your eBay account should match the name on your tax ID and tax returns.
• Detail report. eBay offers a 1099-K detailed report that lists every unadjusted gross transaction. In Seller Hub it is under Payments, then Taxes, then 1099-K details, where you select Generate, and eBay emails you when it is ready.

That last item is the most useful tool for reconciliation. A single large figure tells you very little; a transaction list lets you trace it.

Sales tax is a separate subject. eBay's tax page notes that it collects and remits internet sales tax in applicable jurisdictions and that the tax collected can be viewed in the Orders Report in Seller Hub. To see how the money itself reaches your account, our guide to eBay Managed Payments payouts covers holds and timing, which is a different matter from what ends up on a tax form.

5. A 1099-K is not itself taxable income

This is the single most misunderstood point. The IRS FAQ answers it directly. Being reported on a Form 1099-K does not make a payment taxable, and being left off the form does not make a payment non-taxable. The IRS also says the reporting threshold does not affect whether payments are taxable or whether a return must be filed, and that all income, no matter the amount, is taxable unless the tax law says it is not, even if no form arrives.

eBay says the same in plainer words. Its seller center page states that the 1099-K shows your gross receipts, but you are taxable on your net income, and that receiving the form does not automatically mean you owe tax on the amount reported.

So there are really three separate questions, and the form only helps with the first:

1. How much money passed through the platform? The 1099-K answers this, as a gross figure.
2. Was it income of yours at all? Gifts and reimbursements for shared costs are not payments for goods or services. The IRS says they should not be reported on a 1099-K, and a personal item sold for less than you paid for it generally does not increase your taxable income.
3. If it was income, how much is profit? For a business, that depends on what you can subtract. The IRS points to Publication 535 for how business status affects what is taxable.

The form is not a tax bill. It is a data point the IRS receives, so your return should be consistent with it, or explain the difference.

6. Reconciling the form to Schedule C

If you buy products to resell on eBay as a regular activity, you are likely in business, and the IRS says Form 1099-K payments for self-employed activity go on Schedule C (Form 1040), Profit or Loss from Business. Schedule C is for a business you operate as a sole proprietor, and the IRS instructions say an activity counts as a business if you pursue it for profit with continuity and regularity; sporadic activities and hobbies do not qualify. Where you are in a partnership or corporation, different forms apply, and a preparer should handle that.

On Schedule C, the IRS instructions say to enter your business's gross receipts on line 1 and to check any Forms 1099 you received for business income to be sure the amounts are included. Sales returns and allowances are reported as a positive number on line 2, and returns are refunds for returned goods. The cost of the goods you sold and your other business expenses then reduce the gross to a profit figure. The IRS FAQ also says fees, credits, refunds, shipping, cash equivalents and discounts are not taxable, and you can subtract them from the gross amount reported on the form. The IRS pages cited here do not say which Schedule C line each of those items belongs on, except that the instructions put sales returns and allowances on line 2. Ask your preparer, or read the Schedule C instructions line by line.

An illustrative reconciliation

The figures below are invented to show the method. They are not typical results and not a forecast.

The sum: 31,500 minus 1,200 is 30,300; minus 4,100 is 26,200; minus 19,800 is 6,400. In this example the number printed on the form is $31,500, but the profit is $6,400 before any other expenses such as software, a business phone or shipping supplies. A seller who looked at the form and thought "I owe tax on $31,500" would be overestimating the tax base by a long way.

Two cautions about the example. First, the placement of refunds and fees on particular Schedule C lines is for you or a preparer to confirm. Second, the gross figure on the form follows eBay's processing date, so a sale processed in late December and a payout that reaches your bank in January sit in the year eBay processed them. Your own books should line up with that date when you compare.

The workflow, step by step:

1. Download or generate the 1099-K detail report from Seller Hub and confirm its total equals the gross amount on the form.
2. Compare the report with your own sales records for the year. Differences usually come from processing dates, from sales that belong to a different account, or from payments that are not sales.
3. Pull your refunds, fees and cost of goods for the same period.
4. Build the profit figure and make sure gross receipts on your return are at least consistent with the form. If a difference is real, be ready to explain it.
5. Keep the form, the detail report and your working papers together with the rest of your tax records. The IRS FAQ says to keep the form with your other tax records when you prepare your return.

For the cost side of that sum, our guide to pricing eBay listings for profit shows how fees and landed cost fit together, and eBay dropshipping fees explained covers the fee lines you will be subtracting.

7. Profit still has tax consequences

Reducing gross to net does not make the tax disappear. The IRS Self-Employed Individuals Tax Center says self-employed people generally pay estimated taxes quarterly using Form 1040-ES, that self-employment tax (Social Security and Medicare) is reported on Schedule SE, and that you have to file an income tax return if your net earnings from self-employment were $400 or more. It also says the result of Schedule C feeds into the Schedule SE calculation. The page does not give a dollar level at which estimated payments become mandatory, so check the Form 1040-ES instructions for the rules that fit your situation.

The practical lesson is to track profit as you go rather than discover it from a 1099-K in January.

8. Personal items sold at a loss

The IRS has a specific situation in mind here: a person who clears out their own belongings, sells them for less than they paid, and then receives a 1099-K showing the gross proceeds. The IRS says gain or loss equals the sale price minus the original purchase price, which is called basis. A gain is taxable and is reported on Form 8949 and Schedule D. A loss on a personal item is not deductible.

The form does not know any of that. The IRS notes that the gross payment amount does not account for the original purchase price of the items sold or whether they were sold at a gain or a loss.

How to report it for 2024 and later returns

For tax years 2022 and 2023, the IRS had people enter offsetting amounts on Schedule 1, lines 8z and 24z. For 2024 and later, the IRS says to report the combined Form 1099-K amounts in the entry space at the top of Schedule 1 (Form 1040). Alternatively, the sale can be reported on Form 8949 and Schedule D, for instance if you already file those forms, with an "L" in column (f) to show the loss is nondeductible. The IRS example is a refrigerator bought for $1,000 and sold for $700, with Form 8949 showing $700 as proceeds, $1,000 as basis, the code L, and a $300 adjustment so the result is $0.

Check the form instructions for the tax year you are filing, because these entries have changed from year to year.

Illustrative example

Say, for illustration, that you sold a sofa you bought for $900 for $400, and a vintage lamp you bought for $120 for $500. The sofa is a $500 loss that is not deductible. The lamp is a $380 gain (500 minus 120) that is taxable and goes on Form 8949 and Schedule D. The IRS says gains and losses on separate sales are reported separately, so the lamp's gain is not reduced by the sofa's loss.

Where this applies to dropshippers, and where it does not

The personal-item rules are written for personal property. Goods you bought in order to resell are, in general, part of a business, so their cost belongs in your business calculation on Schedule C. If you sell both kinds on one account, your records need to separate them. The IRS also says, for mixed personal and business activity, to keep the transactions separate so tax owed is easier to determine. A tax professional can tell you where a borderline case falls.

If you cannot find what you paid for a personal item, the IRS suggests old bank or credit card statements, asking the seller for records, and Publication 551 for estimating basis.

9. When the form is wrong

Errors happen for several reasons: a payment from family labelled as a sale, a duplicate, a wrong tax ID, or an amount that does not match your records. The IRS spells out a clear routine, and it begins with something many people get wrong: do not contact the IRS, because the IRS cannot correct the form.

1. Contact the filer. The filer's name and contact information are in the upper left corner of the form. If you do not recognize the filer, contact the payment settlement entity (PSE) named in the lower left, above your account number.
2. Request a corrected form. For a form received in error (family payments, payments that are not yours, duplicates), ask for a corrected form showing a zero amount. For wrong information such as a wrong tax ID or gross amount, ask for a corrected form with the right details.
3. Keep everything. Hold on to the original, any corrected form and all correspondence.
4. File on time anyway. If no correction arrives, do not delay filing. The IRS says that for a wrong gross amount you report the incorrect amount in the entry space at the top of Schedule 1 (Form 1040), and for a wrong tax ID you report the payments on the return you normally file.

The IRS FAQ also describes a pattern for zeroing out an error with offsetting entries on lines 8z and 24z of Schedule 1, so that adjusted gross income is unchanged. Its example is an $11,000 payment that was a roommate's share of rent, which is a reimbursement and not income. The "What to do with Form 1099-K" page uses the entry space at the top of Schedule 1 instead. Because the two pages describe the mechanics differently, use the instructions for your own tax year.

What to do with eBay specifically

eBay's help page says that if something looks wrong, contact eBay with the item number and transaction details, raise concerns by March 30 so eBay can review and correct the form by April 15. Those dates are from the page as opened in October 2026, which described the 2025 tax year. April 15 is also the usual filing date, so if a correction is slow, the IRS guidance above (file on time, report the amount, keep records) is what protects you.

Before you assume a number is wrong, remember it is unadjusted: it still includes refunded sales and fees, so a figure that looks too high is often correct on its face.

10. A year-round routine that makes January easy

Sellers who dread the 1099-K are usually those who only look at their numbers once a year. A little routine removes the shock.

• Know your own gross. Total your sales from eBay's reports each month. In January the form should sit close to your own sum, with timing differences you can explain.
• Separate personal and business. Do not run household selling and inventory selling through muddled records. A separate bank account is a simple way to make that obvious in your statements.
• Keep proof of cost. Supplier invoices, order confirmations and receipts are your evidence for cost of goods. Without them you cannot easily prove the difference between $31,500 and $6,400 in the example above.
• Put money aside. Because profit is taxable even when no form arrives, set aside a share of each month's profit. How much is a decision for you and your preparer, since it depends on your whole tax situation.

For the profit side, our eBay fee calculator helps you see what each sale leaves after fees, and our guide on how much you can really make dropshipping on eBay sets out realistic margins. Sellhelm, the eBay dropshipping software this blog belongs to, prices every listing from your real fees, which keeps the profit line honest from the start.

11. Backup withholding and your tax ID

The IRS FAQ explains that when a platform must report a payee, it needs the payee's tax identification number on the form. Not providing it may trigger backup withholding. The IRS lists the circumstances: your TIN is missing or incorrect, you are not exempt, or your name does not match IRS or Social Security Administration records.

If withholding was applied wrongly, the payor may refund it or reduce future withholding in the same year; otherwise you may receive a refund or credit when you file. Federal tax withheld appears in Box 4 of the form and is reported on your return. An ITIN is acceptable for Form 1099-K purposes, and if the number on file is wrong, ask the filer to correct it. eBay's help page also notes that California residents subject to California backup withholding receive Form 592-B, to include with their California return.

12. Common mistakes

• Treating the form total as profit. It is gross receipts before refunds, fees and costs, and eBay and the IRS both say so.
• Assuming no form means no tax. The IRS says income is taxable unless the law says otherwise, whether or not a form is sent.
• Quoting outdated thresholds. $600, $5,000 and $2,500 appear in older articles. The IRS position in its October 2025 fact sheet is $20,000 and 200 transactions for TPSOs.
• Forgetting the state. A lower state threshold can send you a form even when you are under the federal one.
• Calling the IRS to fix it. The IRS says it cannot correct the form. The filer can.
• Waiting for a correction before filing. The IRS says not to delay filing while you wait.
• Losing the cost evidence. Without invoices you may not be able to show the cost figure that reduces the gross to profit.

Sources and how we checked

Facts in this guide were checked against these official pages in October 2026. Rules and figures change, so confirm anything that affects a decision. This is general information, not legal or tax advice.

• IRS issues FAQs on Form 1099-K threshold under the One, Big, Beautiful Bill (IRS)
• Fact Sheet FS-2025-08, Form 1099-K frequently asked questions (IRS)
• Form 1099-K FAQs: General information (IRS)
• Form 1099-K FAQs: What to do if you receive a Form 1099-K (IRS)
• Form 1099-K FAQs: Common situations (IRS)
• Understanding your Form 1099-K (IRS)
• What to do with Form 1099-K (IRS)
• About Form 1099-K (IRS)
• Notice 2024-85, Revised Timeline Regarding Implementation of Amended Section 6050W(e) (IRS)
• IRS announces 2023 Form 1099-K reporting threshold delay (IRS)
• IRS revises and updates frequently asked questions about Form 1099-K (IRS)
• Instructions for Schedule C (IRS)
• Self-Employed Individuals Tax Center (IRS)
• Form 1099-K and other US tax forms (eBay Help)
• Tax Information (eBay Seller Center)

Questions people ask