The most popular ticket final yr? Taylor Swift. With its large scale and fan frenzy, the tour has cemented Swift’s standing as one of the influential pop stars of the twenty first century, and its affect is prone to be felt for years to return. (Picture by Asanka Ratnayake/Getty Pictures)
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The shiny new provisions within the One Large Lovely Invoice Act (OBBBA)—like no tax on tips—might seize the headlines, however there’s one other change that many companies are cheering: restored reporting thresholds for Type 1099-Ok (for cost card and third-party community transactions).
The IRS has now issued FAQs to assist taxpayers perceive how the OBBBA provisions have an effect on Type 1099-Ok. Right here’s what it’s good to know.
When It Comes To Types 1099-Ok, What Modified Beneath OBBBA?
Beneath OBBBA, there are adjustments to the reporting thresholds for Type 1099-Ok (for cost card and third-party community transactions), Type 1099-MISC (for funds not coated by different 1099 kinds), and Type 1099-NEC (for nonemployee compensation).
Type 1099-Ok is used to report funds obtained for items or companies which can be processed via cost apps (like PayPal and Zelle), on-line marketplaces (like eBay), and, after all, bank cards. It’s issued while you hit sure reporting thresholds.
OBBBA reinstates the $20,000 and 200 transactions thresholds, retroactive to 2022 (or as if the reporting adjustments American Rescue Plan Act of 2021 had by no means occurred) for sure retailers and companies. That implies that the $20,000 and 200 transactions thresholds will apply to the tax yr 2025.
No threshold applies to cost card transactions—cost playing cards embody credit score, debit, or saved worth playing cards, resembling reward playing cards. That continues to be the case underneath OBBBA.
What Qualifies as a Fee Card?
A cost card contains bank cards, debit playing cards, and stored-value playing cards (together with reward playing cards), in addition to cost via any distinctive marks of a cost card (resembling a bank card quantity).
What’s the Threshold Quantity For Type 1099-Ok For Funds Acquired By means of A Fee Card Transaction?
There is no such thing as a threshold quantity that should be met to obtain a Type 1099-Ok resulting from funds obtained via a cost card transaction. Subsequently, in the event you obtained $0.01 in funds from a cost card transaction, you must obtain a Type 1099-Ok for these funds.
What’s a Third-party Settlement Group (TPSO)?
A TPSO is the central group that has the contractual obligation to make funds to collaborating payees (typically, a service provider or enterprise) of third-party community transactions. This contains apps used to deal with cash transfers between consumers and sellers—assume PayPal or Venmo—or on-line marketplaces like Etsy or Amazon.
What’s the Threshold Quantity For Type 1099-Ok As a result of Funds Acquired By means of A TPSO?
TPSOs are required to report when complete gross funds for items or companies exceed $20,000 and there are greater than 200 transactions for a payee.
Your state might have a decrease reporting threshold for TPSOs, which might end in you receiving a Type 1099-Ok, even when the whole gross funds and transactions didn’t exceed the federal reporting threshold.
Does the Change in TPSO Reporting Threshold Imply I Gained’t Get a Type 1099-Ok if I Obtain Gross Funds Totaling $20,000 or Much less, or Have 200 or Fewer Transactions?
Not essentially. A TPSO should ship a Type 1099-Ok for funds for items or companies beneath the thresholds as a matter after all—there’s no rule that claims they will’t.
You could possibly additionally obtain a Type 1099-Ok from different cost settlement entities, resembling service provider buying entities, as a result of they don’t have a de minimis reporting threshold. As well as, in the event you had been topic to backup withholding, a TPSO should file a Type 945, Annual Return of Withheld Federal Revenue Tax, and ship you a Type 1099-Ok.
And, as famous earlier, your state might have a decrease reporting threshold for TPSOs, which might end in you receiving a Type 1099-Ok, even in the event you don’t exceed the federal reporting threshold.
Do I Should Report Funds on My Tax Return If They Are Not Reported on a Type 1099-Ok?
Sure. Whatever the reporting threshold, all taxable earnings, together with earnings earned via cost apps and on-line marketplaces, and earnings earned from facet gigs and contracting jobs, should be reported in your tax return.
What’s Reported on Type 1099-Ok?
The important thing bit is the gross cost quantity, which is reported in Field 1a. It does not embrace changes for charges, credit, refunds, transport, money equivalents, or reductions—these gadgets aren’t earnings, and you may deduct these gadgets from the gross quantity in your tax return.
The gross cost quantity additionally doesn’t account for the unique buy value (foundation) of any gadgets bought, or whether or not they had been bought at a acquire or loss. You’ll have to seek the advice of different tax and monetary information to determine the right earnings in your tax return.
When Ought to I Obtain Type 1099-Ok?
Sometimes, by January 31 of the yr following the transactions.
Are All Funds Reported on my Type 1099-Ok Taxable?
Not essentially. As famous earlier, simply because a cost is reported on a Type 1099-Ok doesn’t imply it’s taxable. Additionally, simply because a cost shouldn’t be reported on a Type 1099-Ok doesn’t imply it isn’t taxable.
The way you report Type 1099-Ok cost quantities in your tax return is dependent upon the kind of funds you obtained.
For instance, in the event you promote a used private merchandise for lower than you paid for it, you could obtain a Type 1099-Ok, however the sale proceeds might not improve your taxable earnings since you didn’t make a revenue or acquire.
If I Purchase An Merchandise With A Fee Card Or Fee App Or Use An On-line Market, Will I Obtain A Type 1099-Ok?
No. You shouldn’t obtain a Type 1099-Ok for making purchases. Type 1099-Ok is used to report sure funds that you simply obtained for promoting items or offering companies.
How Does a Fee App or On-line Market Know If I Obtain Funds for Items or Providers As Opposed To Cash From Mates and Household?
They don’t. Every cost app or on-line market can have its personal processes for categorizing funds—for instance, some have totally different accounts for enterprise and private transactions. The IRS encourages you to evaluate the insurance policies of any apps or on-line marketplaces you utilize to be sure that your transactions are reported appropriately.
Additionally, be sensible. Content material creators—like some on TikTok—have steered that you could merely transfer your on-line enterprise over to a private account to keep away from receiving Type 1099-Ok. That, they cause, means you will not should report that earnings in your tax return. That is horrible recommendation for a lot of causes. Not solely is it tax evasion, however most apps require compliance with their phrases and companies. If you happen to’re mendacity about utilizing the app, it might get you booted off and, maybe, completely banned.
What Ought to I Do if My Little one or Different Dependent Receives a Type 1099-Ok?
In case your youngster or dependent supplied companies for others, was paid via a cost app, bought gadgets through an internet market, and obtained a Type 1099-Ok, they might have to file a tax return. The common guidelines relating to whether or not to file nonetheless apply.
Who Ought to I Name If I Have a Query About My Type 1099-Ok (Or if the Info is Improper)?
Name the individual or enterprise who issued Type 1099-Ok (the contact data is mostly within the higher left nook of the shape). Don’t name the IRS.
What If My Information is Improper, However I Can’t Get a Corrected Type 1099-Ok?
If you cannot get a corrected Type 1099-Ok, file anyway—you may zero out the error while you file your return. (You’ll find information and examples here.)
If I Obtain A number of Types 1099-Ok That Report Proceeds from the Sale of Private Gadgets Offered at a Loss or Faulty Types 1099-Ok, Can I Mix Them All into One Merchandise on Schedule 1?
Sure. Report the mixed Type 1099-Ok quantities within the entry house on the prime of Schedule 1 (Type 1040).
If I Acquired A Type 1099-Ok For Crowdfunding Donations, Do I Have To Report It?
Perhaps. It’s possible you’ll obtain a Type 1099-Ok for cash raised via crowdfunding. A few of that cash could also be taxable to you, and you could be required to report it in your earnings tax return. It’s additionally doable that a number of the funds raised could also be thought-about a present and wouldn’t be taxable to you. (If doubtful, seek the advice of together with your tax skilled.)
Will I Get Type 1099-Ok If I Resold My Taylor Swift Tickets On-line?
Most likely. The foundations associated to transactions nonetheless apply—cost settlement entities, together with TPSOs, that facilitate ticket gross sales and re-sales are required to file Type 1099-Ok if complete gross funds and transaction exceed the federal reporting threshold.
Even in the event you don’t obtain a Type 1099-Ok, funds for ticket gross sales and re-sales may must be reported on a Type 1099-MISC or Type 1099-NEC. (These data returns should be filed by any individual engaged in a commerce or enterprise that makes funds in the midst of such commerce or enterprise to a different individual. These thresholds changed under OBBBA, too. For funds made after December 31, 2025, the reporting threshold for Type 1099-MISC or Type 1099-NEC is met if the quantity of funds to a recipient totals $2,000 or extra.)
Don’t simply shake it off—the earnings from ticket gross sales is includible in your gross earnings.
Why Have been There Adjustments within the First Place?
The adjustments underneath OBBBA ought to imply fewer kinds for taxpayers. In 2023, the IRS estimated that as much as 44 million Types 1099-Ok can be despatched to taxpayers.
The purpose in altering the reporting threshold for the Type 1099-Ok initially was elevated compliance. In line with the IRS, tax hole research have persistently demonstrated that third-party earnings reporting considerably raises voluntary compliance with tax legal guidelines. For instance, computerized doc matching within the early Nineteen Eighties—the place the IRS matched knowledge reported by third-party monetary establishments to knowledge reported by taxpayers—considerably diminished underreporting of dividend and curiosity earnings. And the 1987 requirement that taxpayers provide Social Safety numbers for dependent youngsters resulted in a marked distinction within the numbers of dependents claimed on returns—seven million fewer dependent youngsters had been claimed than within the earlier yr.
That is Good, Proper? I Can Depend on This Information?
The IRS issued this steering in Fact Sheet 2025-08. It’s… not quick. I’ve summarized the very best bits for you, however you may learn via the longer model for extra particulars.
The IRS put these FAQs out to get data to taxpayers shortly. Nevertheless it’s necessary to grasp that steering discovered on the IRS web site isn’t to be handled as gospel. Particularly, because the IRS has reminded us repeatedly, FAQs and different data on the IRS web site aren’t included within the Inner Income Bulletin and may’t be relied upon as authorized authority. Which means the data can’t be used to assist a authorized argument in a court docket case.
Nonetheless, in the event you depend on the FAQs “fairly and in good religion,” the IRS suggests that you simply gained’t be topic to a penalty the place there’s an affordable trigger normal for aid, together with a negligence penalty or different accuracy-related penalty.
So What Ought to I Do?
I all the time encourage taxpayers to seek the advice of a tax skilled. And, after all, hold checking in with our Forbes workforce for extra data.
