IRS Reinstates $20,000 Threshold for Form 1099-K Reporting

The IRS has updated the reporting thresholds for Form 1099-K, which reports payments received through payment apps and online marketplaces, as part of changes under the One Big Beautiful Bill Act (OBBBA). The threshold requiring reporting has reverted to $20,000 in gross payments and 200 transactions for third-party settlement organizations, effective retroactively to 2022, effectively undoing prior lower thresholds established by the American Rescue Plan Act of 2021. These changes aim to reduce paperwork and surprises for gig workers and casual sellers, who receive a Form 1099-K if they exceed these thresholds. Notably, payments made via payment card transactions, including credit and debit cards, have no minimum threshold for reporting and always require a Form 1099-K. The IRS has also issued updated FAQs to clarify compliance obligations and guidance regarding erroneous forms and personal item sales, with protections for taxpayers who rely in good faith on this guidance. These updates accompany broader IRS efforts to adjust tax brackets for inflation and ensure tax fairness for the 2026 fiscal year.