You got paid through a payment app for a side gig. Will you get a 1099-K? A 1099-K is a tax form. For payment apps, the federal line is over $20,000 and over 200 payments in a year.
Card payments and some states work differently, as you will see below. The IRS is the U.S. tax agency. It says the total on the form is gross. Gross means the full amount, before anything comes out.
Who sends you one
A payment app moves money for you, like PayPal. The IRS says a 1099-K can come from a payment card or from a payment app or online marketplace. The IRS calls these companies third party settlement organizations.
This can apply if you sell things on Mercari. It can also apply to app pay. Think of taking studies on Prolific or typing audio for Rev. It fits testing websites and apps too.
The federal rule: two numbers, not one
A transaction is one payment. The federal rule for payment apps needs two things to be true. Your payments must pass $20,000. You must also have more than 200 transactions.
Both parts must happen. One alone is not enough.
PayPal’s own help page states the same rule. It says a 1099-K goes out once you pass $20,000 and 200 transactions for goods and services in a year.
Card payments have no floor
Say a customer pays you by credit or debit card, not through an app. That rule is different. The IRS says there is no minimum for a card payment at all.
So even one card sale can lead to a 1099-K.
Your state might set the bar lower
The federal rule is not the only rule. The IRS says your own state may set a lower line. So you could get a 1099-K even if you stayed under the federal line. Check your state’s own rule if you are not sure.
The number in Box 1a is gross, not your profit
Box 1a is a line on the form. It shows your gross total. The IRS says this number is not cut for fees, refunds, or shipping.
Say you sell an item on Mercari and pay a fee. That fee is not taken out of the Box 1a total. So the form does not show your profit. You work that out from your own records.
No form does not mean no tax
The IRS runs a Gig Economy Tax Center page. It says you must report gig income, even when no 1099-K is sent. That is true whether you type audio for Rev, take studies on Prolific, or do other paid gig work.
Gifts and shared bills are not income
Not every payment on an app counts as income. Some money is a gift. Some is a friend paying you back for a shared cost. The IRS says neither should be on a 1099-K.
If the form looks wrong
Sometimes a 1099-K has a mistake. Maybe a payment on it was never really gig pay. The IRS says to contact the company that filed the form.
Why some pages still say $5,000
You may have read that the line is $5,000. Here is where that number came from.
In November 2023, the IRS said it planned to use $5,000 for tax year 2024. Later, a new law changed course. The IRS says that law put back the older line: over $20,000 and over 200 transactions.
That is the rule the IRS gives today. A page that still says $5,000 may not have caught up.
This is general information, not tax advice. For your own case, ask a tax professional or the IRS.
Questions people ask
Do I have to report gig income if I never get a 1099-K? The IRS says yes. You must report gig income even without a 1099-K.
I got a 1099-K for less than $20,000. Was that a mistake? Maybe not. The IRS says a state can set a lower line than the federal rule.
What if my 1099-K includes money a friend paid me back? The IRS says gifts and shared-cost repayments should not be on the form. If that happened, contact the company that filed it.