How to Report 1099-K Income on Your Taxes

Do you own a business that directly processes credit or debit card transactions? Do you sell items on online marketplaces? If yes, you might be getting a 1099-K tax form this year.

A 1099-K is a tax form the IRS uses to track payments and transactions processed through networks like PayPal and Venmo, as well as credit card processors.

How to report 1099-K income on your tax return

How you report your Form 1099-K (Payment Card and Third Party Network Transactions) income on your tax return depends on the types of transactions you made over the course of the tax year:

• Schedule C reports transactions related to self-employment or a business you own
• Schedule 1 reports personal items you sold at a loss
• Form 8949 and Schedule D report personal item sales that generated a profit

If the numbers on your 1099-K look high and you’re worried about tax liability, don’t panic. You usually pay taxes only on profits you generate.

Self-employment or business transactions

On Line 1 of Schedule C (an extra form attached to the main tax Form 1040), you report the gross receipts listed on your 1099-K. Then, in Part II of the Schedule C, you deduct legitimate business expenses from the total to lower your taxable income.

Imagine you have a reselling business. Your 1099-K includes total gross receipts (proceeds from all reportable transactions) of $50,000. However, the total cost of the items you resold was $20,000, and you spent $5,000 on shipping. Subtracting those costs from your total gross receipts, you’d typically only owe taxes on the $25,000 profit.

Personal items you sold at a loss

Plenty of people sell old clothes and other belongings to earn a little extra cash. If you sold items without making a profit, you typically aren’t liable for taxes on the proceeds.

You typically report these transactions on Schedule 1 (attached to Form 1040) or Form 8949 (Sales and Other Dispositions of Capital Assets). The information you enter on Form 8949 is carried over to Schedule D.

Personal items you sold and made a profit

In some cases, you might end up selling a personal item for more than you paid. When this happens, you’ll likely owe tax on the profit. Report these sales on Form 8949.

Who gets a Form 1099-K?

You might receive Form 1099-K if:

• You sell goods or services, and customers pay you directly with credit or debit cards
• You sell goods or services on online marketplaces like eBay, Etsy, Mercari, or Poshmark

Payment card processors and online marketplaces are responsible for sending Form 1099-K — typically through the mail, but more companies are delivering digital forms as well.

2026 reporting thresholds

If you have a small, part-time business or sell just a few personal items, you may not receive Form 1099-K.

For 2026, you’ll receive a 1099-K from online marketplaces if you meet both of these requirements:

• Generated at least $20,000 in gross receipts
• Made at least 200 transactions

Notably, there’s no minimum reporting threshold if you process credit or debit card transactions yourself.

Even if you don’t receive a 1099-K, you must report these transactions on your income taxes.

Read more >> How to Build Credit as a Freelancer

Online marketplaces send a 1099-K only if you earn more than $20,000 in gross receipts and have more than 200 transactions. Process card payments directly and there’s no threshold at all — you get a form regardless of amount.

Tips to make 1099-K reporting easier

Reporting your income when you have a 1099-K is more complex than a simple W-2. If you make mistakes with the math, you could end up paying more in taxes than needed. You might also get flagged by the IRS for further scrutiny.

These year-round tips can help simplify the process when tax season rolls around.

Keep records of all transactions

Don’t rely only on your 1099-K. Keeping clear and detailed records of your transactions can help you accurately track your revenue and spot errors.

If you sell items on online marketplaces, you can pull up a list of transactions for the year from your online account. However, if you process your own credit and debit card transactions, maintain your own records of what you sold.

Separate business and personal accounts

Mixing business and personal transactions can complicate your taxes, and you might wind up paying taxes on gifts and non-business transfers. Commingling funds is also a red flag for fraud with the IRS.

Track deductible expenses throughout the year

Every business comes with expenses, and many of them are deductible. If you subtract business expenses from your gross receipts, it can lower your total taxable income.

Common examples of deductible expenses include:

• Using part of your home as an office space
• Packing and shipping supplies
• Platform fees
• Software subscriptions
• Use of your personal vehicle for business-related driving
• Cost of inventory or goods sold

Don't wait until the last minute to dig through your records and add up your deductions. Keeping track throughout the year can simplify tax season.

Consider talking with a certified public accountant or tax professional for personalized guidance on deductible expenses for your business.

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Handling taxes when you’re self-employed or own a business can be complex. Your credit is a big part of your financial picture and it works the same whether you earn a paycheck or a 1099-K.

Kikoff is a credit-building platform designed for people with thin or limited credit histories. Kikoff’s Credit Account reports your on-time payments to all three credit bureaus, building the payment history that carries more weight in your score than anything else. No hard credit check required.