{"id":353946,"date":"2022-08-19T07:44:42","date_gmt":"2022-08-19T12:44:42","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/tax\/federal-taxes\/do-you-need-to-report-your-online-sales-to-the-irs.html"},"modified":"2026-03-31T10:53:36","modified_gmt":"2026-03-31T15:53:36","slug":"do-you-need-to-report-your-online-sales-to-the-irs","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/tax\/federal-taxes\/do-you-need-to-report-your-online-sales-to-the-irs.html","title":{"rendered":"Received a Form 1099-K? A Guide to Avoiding IRS Penalties"},"content":{"rendered":"\n
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Received a Form 1099-K? A Guide to Avoiding IRS Penalties<\/h1>\n\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Laura Temme, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

Form 1099-K<\/span> is an IRS<\/span> information return<\/span> that reports payment card<\/span> and third-party network transactions<\/span> to help track potential taxable income<\/span>. You may receive this form if you accepted credit card<\/span> payments for any amount or received over $20,000 with more than 200 transactions through payment apps<\/span> like PayPal<\/span> or Venmo<\/span>. To avoid IRS<\/span> penalties, you must properly report or offset these amounts on your tax return<\/span>, even if the payments represent non-taxable personal reimbursements or items sold at a loss.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

If you recently received a Form 1099-K<\/span><\/a>\u200b from PayPal<\/span>, Venmo<\/span>, or another third-party payment app<\/span>, you are not alone. While this form can be confusing and alarming, it doesn’t always mean you owe more tax. However, ignoring it can lead to an automatic IRS<\/span> notice and penalties.<\/p>\n

Major changes and reversals in tax reporting rules have caused a lot of confusion for taxpayers<\/span>. The American Rescue Plan Act of 2021 reduced the 1099-K reporting threshold<\/span>. The new threshold was just $600 per calendar year<\/span>. This replaced the old threshold of over $20,000 and more than 200 transactions. However, after multiple delays, the One Big Beautiful Bill retroactively reinstated the previous higher threshold for third-party payment platforms.<\/p>\n

But, you may still receive a 1099-K form<\/span> even if you don’t meet the federal threshold because states may have lower reporting requirements<\/span>, or because you accepted payment card<\/span> transactions, which have no minimum threshold.<\/p>\n

As you navigate your tax return<\/span>, understanding Form 1099-K<\/span> is only the first step. Knowing how to handle it correctly is critical, as mistakes can trigger an IRS<\/span> notice, audit, or penalties. This guide provides clear steps for handling your 1099-K and explains what to do if the information is incorrect or non-taxable.<\/p>\n

Understanding Form 1099-K<\/span> and Who Receives It<\/strong><\/h2>\n

Form 1099-K<\/span> is a type of information return<\/span> that reports payment card<\/span> and third-party network transactions<\/span> to the IRS<\/span>. Three types of businesses are required to issue this form if they process payments to you during a tax year<\/span>:<\/p>\n