The updated 1099-K reporting threshold for 2025 taxes - what you need to know
I've been hearing a lot lately about changes to the 1099-K reporting threshold for the upcoming tax season. My side gig on Etsy brought in about $740 last year, and I never had to worry about reporting it before. But now I'm getting conflicting info from friends about whether the threshold is $600 or back to $20,000? One friend said the IRS changed it again for 2025 filing season. I'm confused about whether I need to expect a 1099-K form from Etsy (they haven't sent me one in previous years). Will I need to report this income differently on my taxes this year? I'm using TurboTax like I always do, but I want to make sure I'm prepared for any changes. Has anyone else who sells stuff online gotten clarity on this?
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Joy Olmedo
Great question! The 1099-K reporting threshold has indeed been a bit of a moving target lately, which has caused a lot of confusion. Here's the current situation: While the IRS had originally planned to lower the threshold to $600 for payments received in 2023 (for 2024 filing season), they postponed that change. For the 2025 filing season (covering 2024 transactions), the 1099-K reporting threshold remains at the higher $20,000 AND 200 transaction threshold. That said, it's important to remember that regardless of whether you receive a 1099-K, all income is technically taxable. So your $740 from Etsy should be reported on your tax return, even though Etsy won't be required to send you a 1099-K for that amount. When you use TurboTax, you'll report this as self-employment income. They'll guide you through entering income that wasn't reported on a tax form, so you should be covered.
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Isaiah Cross
•Wait, so even if I don't get a 1099-K, I still need to report my online sales? What if I'm just selling my old stuff at a loss like on Facebook Marketplace? That's not really income, right?
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Joy Olmedo
•You're asking a good question that many people wonder about. For personal items you're selling at a loss (like used household items on Facebook Marketplace), that's generally not considered taxable income because you're selling them for less than you paid originally. However, for your Etsy shop or similar platforms where you're selling items for profit or creating things to sell, that is considered income and should be reported, even without a 1099-K. The reporting threshold only determines whether the platform is required to send you the form, not whether the income is taxable.
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Kiara Greene
I was in the exact same boat last year with my small Shopify store that made around $900. I was so confused about what to report and how to document everything properly. I eventually found this AI tool called taxr.ai that literally saved me hours of research and worry. It analyzed my situation and explained exactly what I needed to do regarding the 1099-K threshold confusion. The tool broke down the current reporting requirements and helped me understand that even though I wouldn't get a 1099-K form with the current $20,000 threshold, I still needed to report my income. Check out https://taxr.ai if you're still confused about this stuff - it gives really specific guidance based on your situation.
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Evelyn Kelly
•How exactly does taxr.ai work? Does it just give general advice or does it actually help with filling out the forms? My daughter sells crochet stuff on Etsy and made like $900 last year.
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Paloma Clark
•Sounds interesting but im skeptical. Is this just another tax preparation service? How is it different from just using turbotax that OP mentioned?
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Kiara Greene
•It's more of an AI assistant that specializes in tax questions and gives personalized advice. You can ask specific questions about your situation, like "I made $900 selling crafts on Etsy, do I need to report this even without a 1099-K?" and it gives you clear answers with explanations about why. It really helps with understanding the requirements for your specific situation. For your daughter's situation, it would definitely help clarify her reporting requirements and give guidance on tracking expenses for her crochet business to maximize deductions.
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Evelyn Kelly
I tried taxr.ai after seeing the recommendation here and wow it was actually super helpful! My daughter was stressing about her Etsy shop income and whether she needed to report it. The AI answered all our questions about the 1099-K threshold and even helped us understand which of her crochet supplies could be deducted as business expenses. It was so much clearer than the generic advice we were finding online. She's feeling much more confident about filing correctly now!
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Heather Tyson
For anyone dealing with 1099-K confusion, I spent WEEKS trying to get through to the IRS to get a straight answer about reporting thresholds for my online sales. Kept getting disconnected or waiting for hours. Finally found Claimyr https://claimyr.com which got me connected to an actual IRS agent in like 20 minutes instead of the usual 2+ hour wait. The agent confirmed everything that was mentioned above about the $20k threshold still being in place for 2025 filing season, but also gave me specific guidance for my situation with multiple platforms. Totally worth it. Here's a video showing how it works: https://youtu.be/_kiP6q8DX5c if anyone else is tired of waiting on hold forever.
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Raul Neal
•How does this even work? The IRS phone lines are always jammed. Are you saying this somehow gets you to the front of the queue? Seems too good to be true.
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Paloma Clark
•This sounds like a scam. Why would I pay someone else to call the IRS when I can just do it myself for free? And how would they possibly get you through faster than anyone else?
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Heather Tyson
•It's not about cutting the line - they use an automated system that basically waits on hold for you and then calls you when they get an IRS agent on the line. So instead of you personally waiting on hold for hours, their system does it for you, and you only get on the phone when there's actually an agent ready. The IRS doesn't give anyone special treatment - the service just handles the hold time for you so you don't have to sit there yourself. It's especially helpful if you've already tried calling yourself and got disconnected after waiting forever, which happens to tons of people.
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Paloma Clark
Ok I have to admit I was wrong about Claimyr. After my skeptical comment I decided to try it because I've been trying to reach the IRS for 3 weeks about a missing refund AND this 1099-K confusion for my side business. I kept getting disconnected after waiting 1-2 hours. Using that service, I got a call back with an actual IRS agent on the line within about 40 minutes. The agent confirmed the 1099-K threshold is staying at $20k for this filing season and also helped me track down my refund issue. Huge time saver for me since I couldn't afford to sit on hold during work hours anymore.
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Jenna Sloan
There's another important thing to consider about the 1099-K threshold - even though platforms won't send you a form unless you hit $20k/200 transactions, many of them (including Etsy) are still reporting ALL seller earnings to the IRS regardless of amount. So while you might not get a form, the IRS still knows about your income. I learned this the hard way last year when I didn't report my $1200 in Etsy sales thinking it was under the threshold, and got a letter from the IRS later asking about unreported income. Better to report everything!
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Kingston Bellamy
•This is exactly what I was worried about! So even though Etsy won't send me a 1099-K for my $740, they're still telling the IRS about it? That's really good to know. Do you know if we need to file a Schedule C for these small amounts or is there a simpler way to report it?
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Jenna Sloan
•Yes, for income from a side business like your Etsy shop, you'll need to file a Schedule C, even for smaller amounts like $740. It's considered self-employment income. The good news is that with Schedule C, you can also deduct your business expenses - materials, shipping supplies, listing fees, etc. This can significantly reduce your taxable income. Just make sure to keep good records of all your expenses related to your Etsy sales.
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Christian Burns
dont forget about state taxes too!! some states have different rules for reporting 1099-K income. like here in Massachusetts our threshold is still $600 even tho the federal is $20k. so you might get a state 1099-K even if you dont get a federal one. check your state tax dept website!!
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Sasha Reese
•This is a really good point. I live in Vermont and they also kept the $600 threshold for state reporting. It creates a weird situation where you might get a state 1099-K but not a federal one. Always good to double-check your specific state requirements.
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Chloe Anderson
This is such a helpful thread! I'm in a similar situation with my small craft business on multiple platforms. One thing I learned from my tax preparer is that it's really important to track ALL your business expenses throughout the year, not just when tax season comes around. Even if you're only making $740 like the original poster, you can still deduct things like materials, shipping costs, platform fees, even a portion of your internet bill if you use it for business. I use a simple spreadsheet to track everything monthly - it only takes a few minutes but it's saved me hundreds in taxes. Also, if you're using platforms like Etsy, PayPal, or Square, most of them have annual tax summary reports you can download that show all your transactions for the year. This makes it much easier when you're filling out Schedule C, especially if you don't receive a 1099-K form.
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Alicia Stern
•This is really great advice about tracking expenses! I'm just starting out with online selling and had no idea about deducting things like internet costs. Do you happen to know if there's a minimum amount you need to make before you can start claiming business deductions? And for the internet bill portion - how do you figure out what percentage to deduct? I work from home part-time so I use internet for both personal and business stuff.
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