When will I get a 1099 from PayPal? Transaction limit questions for 2025 taxes

Wait, so even if I'm under $600 total for the year, I still need to report that income? I thought if you don't get a 1099 you don't have to worry about it. Also, does this apply to personal payments or just business transactions?

Yes, you are legally required to report all income regardless of whether you receive a tax form or not. The $600 threshold is just about when PayPal is required to send you and the IRS a 1099-K, but it doesn't change your obligation to report income. The requirement applies to payments received for goods and services, not personal payments like gifts or reimbursements from friends. PayPal typically differentiates between "Friends and Family" transactions versus "Goods and Services" transactions. Only the latter count toward the $600 threshold for 1099-K reporting.

Does it work with other payment platforms too? I use Venmo and Cash App sometimes for my side hustle selling custom t-shirts, and I'm worried about hitting thresholds there too.

That sounds useful but im suspicious of giving my financial docs to some random website. Is it actually secure? How do you know they're not just stealing your information?

Yes, it definitely works with other platforms! It supports Venmo, Cash App, Stripe, and pretty much all the major payment processors. I've used it with both PayPal and Venmo for my business, and it treats them all the same way for tax purposes. Regarding security, I was hesitant at first too, but they use bank-level encryption and don't store your actual financial data after processing. They just extract the tax-relevant information. Plus you can manually upload PDFs rather than connecting accounts if you prefer. I've been using it for two tax seasons now without any issues.

How does this actually work? Do they just have some secret phone number to PayPal that we don't know about? Seems too good to be true.

Yeah right... there's no way this works. PayPal is NOTORIOUS for being impossible to reach. I've literally tried for weeks to get someone on the phone about my account issues. I'll bet this is just another scam that charges you and then puts you in the same queue everyone else is in.

They don't have a secret phone number - they use technology that navigates phone trees and holds your place in line for you. When an agent finally picks up, you get a call connecting you directly. It's basically like having someone wait on hold for you. I was skeptical too, but it's not a scam. They don't ask for any PayPal login info or sensitive account details - they just need the public customer service number (which you can verify) and your phone number so they can call you when a rep is available. I've used it three times now for different companies, not just PayPal, and it's worked every time.

I need to caution against this approach. While it's true that staying under $600 on each platform might avoid getting a 1099-K, this could potentially be viewed as intentional tax evasion if you're deliberately structuring transactions to avoid reporting requirements. The IRS requires you to report ALL income regardless of whether you receive a 1099 or not. Splitting payments across platforms doesn't change your tax obligations, it just changes whether the platforms report to the IRS. If you were audited, this strategy could actually create additional problems for you.

I didn't mean don't report the income! Of course you should still include everything on your taxes. I just meant if you want to avoid the hassle of dealing with formal 1099s and matching them exactly on your return, keeping each platform under $600 means you won't have those forms to deal with. I report all my woodworking income regardless - I just prefer not having to reconcile official tax forms when I file. Less paperwork and less chance of getting flagged for mismatched numbers.

You can download your PayPal transaction history as a report. Go to your PayPal activity page, click on "Statements" and then select "Activity export." Choose the date range you want to check and make sure to select "Commercial payments received" or a similar option (might vary depending on your account type). This will give you a CSV file you can open in Excel or Google Sheets. Just add up all the payments marked as "Payment Received" that are for goods and services. Remember personal payments (Friends & Family) don't count toward the threshold.

This is such great advice about keeping detailed records! I wish I had started doing this from the beginning of the year. I'm scrambling now trying to go back through months of PayPal transactions to figure out what counts toward the threshold. Do you have any tips for categorizing transactions that might be unclear? Like I sold some old textbooks - is that considered business income or just personal property sales? And what about when someone pays you back for covering their portion of a group gift - does that count as personal even if it goes through goods & services by mistake?