Income of $600 or over per year earned through third-party payment apps (such as Zelle, PayPal, Cash App, or Venmo), should be reported to the IRS on form 1099-K.[i] Here’s what taxpayers who earned money through a payment platform in 2025 should expect when filing taxes.
How is your 2025 tax return affected by the IRS 1099-K rule?
For the 2025 tax year, you’ll receive a 1099-K if you earned at least $2,500 through at least one app or platform. If you used multiple apps, you’ll receive multiple 1099-Ks. This will be reported on your 1040 Schedule C, Profit or Loss From Business.[ii]
Is money owed for everything that you sell?
If you sell a personal item like a table for less than you paid, you won’t owe taxes on the sale because it is a personal item and was sold at a loss. However, you may be required to show documentation of the original purchase to show that you truly sold the item at a loss.[iii]
Tips on filing taxes on money earned through a payment app/platform
· Keep all identification numbers accessible
If you own a business, you generally have an employer identification number (EIN). If you are a sole proprietor, gig worker, or freelancer, you will have to provide a Social Security Number (SSN) or individual tax identification number (ITIN). It is helpful always to keep your identification numbers accessible.
· Set up a business bank account
If you receive business income, it may be beneficial to establish a business bank account. Doing so lets you keep your business and personal transactions separate and makes managing responsibilities like filing taxes easier.
· Stay informed
With the IRS again delaying the proposed changes to Form 1099-K, it is important to stay current on information relevant to your situation, for example, when Form 1099-K becomes effective and the details within it, whether or not they have changed since this new postponement. Tax rules are regularly being modified, and being aware of any alterations can help mitigate the risk of filing an inaccurate return that ends up having to be amended later on.
· Maintain records
Maintaining accurate records of your inventory, sales, and business activities is essential to file your 1099-K accurately, and in the event of a sale, you may be able to avoid having to pay taxes on nontaxable income.
Consult your financial professional
Tax filing season can be not only stressful, but it can also be complex. As the new tax regulations are implemented, they may impact your financial strategy and you may consider reviewing your financial goals to determine if they should be modified. This process can be tedious and trying to figure out how these complex rules will affect you could be difficult to calculate on your own. Consider consulting a financial professional so you can learn how to make these new regulations work for you and your financial aspirations.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by LPL Marketing Solutions
LPL Tracking #837360
Sources:
[i]Understanding your Form 1099-K | Internal Revenue Service
[ii]Understanding your Form 1099-K | Internal Revenue Service
[iii]What to Know About the New 1099-K Reporting Threshold | TaxAct
