A 1099-K is an information return that payment platforms and marketplaces — eBay, Etsy, PayPal, and the like — send to both you and the IRS when your gross payments cross a reporting threshold in a year. It reports the total processed through that platform, before any fees, refunds, or costs are subtracted.
The reporting threshold has changed repeatedly in recent years. A phased reduction toward $600 (under IRS Notice 2024-85) was set to take effect, but 2025 federal legislation restored the long-standing threshold of more than $20,000 in gross payments and more than 200 transactions, effective for the 2025 tax year onward — overriding those lower transitional rates. Because this has shifted more than once, confirm the current threshold on the IRS "Understanding your Form 1099-K" page before each tax year. Critically, the threshold is not the same as your tax obligation: every dollar of net profit is taxable whether or not a 1099-K is issued. Receiving one simply means the IRS already has a copy of your gross receipts from that platform.
Because a 1099-K reports gross, not profit, reconciling it against your own records of fees, refunds, and cost of goods is essential — otherwise you can appear to owe tax on money that was never profit. Keep verifying current thresholds with the linked guidance and a tax professional.
Related terms
Schedule C
An IRS tax form (Schedule C - Profit or Loss from Business) used by sole proprietors. Ardent Seller can categorize expenses and generate reports aligned with Schedule C line items.
Final Value Fee
A marketplace's commission on a completed sale, charged as a percentage of the total the buyer pays — including shipping and tax.
Tax Category
An IRS Schedule C expense or income category used to classify transactions for tax reporting. Helps organize your financial data for end-of-year tax preparation.
Net Profit
What remains after all costs — direct costs of goods sold plus overhead, fees, and taxes — are subtracted from revenue. The true bottom line.