Understanding 1099-Ks: Protect Your Wealth and Stay Tax-Ready
These days, people make casual payments more often through electronic applications than with physical cash. Digital payment spending has jumped from approximately $1.7 trillion in 2014 to $18.7 trillion in 2024, and it could exceed $33.5 trillion by 2030, according to Payments Dive.
People gravitate toward digital wallets for speed and convenience. PayPal, Venmo, and Zelle each have more than 100 million global users, with PayPal leading the pack. Many households use these apps regularly—and chances are, you do too. But what often goes unnoticed is that the more you use these services, the more likely you are to receive a tax form in the mail.
A 1099-K reports payments received for goods or services through payment cards, apps, or third-party settlement organizations (TPSOs). Well-known platforms such as Airbnb, eBay, Etsy, Facebook Marketplace, Mastercard, StubHub, and Visa fall under this category. If you’re paid more than $2,500 through any of them in 2025,you may receive a 1099-K next tax season. The IRS plans to lower the reporting threshold to $600 in 2026, with no plans to raise it after that.
This change may affect more people than many realize. Self-employed business owners, freelancers, real estate investors, and even individuals selling personal items can trigger a 1099-K if payments come through a TPSO. These companies must also send copies of the form to the IRS and your state’s taxing authority.
Not all payments reported on a 1099-K count as taxable income. The IRS recognizes that many people use TPSOs to exchange money with friends and family. For example, if you split a dinner bill and your friend reimburses you through Venmo, that payment isn’t taxable. The same holds true for selling used household items at a garage sale, reselling event tickets at a loss, or renting out your home for fewer than 15 days a year through platforms such as Airbnb.
However, many situations do require you to report the income. If you sell event tickets on StubHub at a profit, you must report that income—even if you don’t receive a 1099-K. The same applies to hobby income, such as restoring furniture for a friend, doing freelance design work, photographing a neighborhood wedding for pay, or renting out your car on an app like Turo.
As mentioned, the lower reporting threshold of $2,500—and the upcoming drop to $600 in 2026—could catch many households off guard at tax time. But with the year only halfway through, there’s still time to prepare.
One smart move to consider is separating business and personal transactions. Set up two accounts: one for taxable activity and one for personal, non-taxable payments. Some TPSOs, including PayPal, offer a “friends and family” payment option, but they often block business accounts from receiving personal payments—even though those accounts can still send them.
Also, review your 2024 1099-K if you received one, and double-check the figures with your own records. It’s especially important for small business owners, those with hobby income, or anyone earning rental income or selling personal property for a profit to track earnings and expenses throughout 2025. Keeping good records now can help you avoid surprises next tax season. After all, tax planning shouldn’t end when you file.
If you’re unsure how these changes may impact your income or want to better align your tax strategy with your broader financial goals, we’re here to help. Contact Savant Wealth Management to connect with a team member who can walk you through the details and offer guidance tailored to your situation.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Jonathon D. Merickel
Portfolio Advisor
CFP®, MBA