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Ask Phil: Important 1099-K Update for Small Businesses 

Today, Optima Tax Relief Lead Tax Attorney, Phil, discusses an important tax update for small businesses and self-employed individuals coming in 2025. 

If you receive payments through platforms like PayPal, Venmo, Shopify, Etsy, or other payment services, you will receive a 1099-K form for tax reporting purposes. Form 1099-K report payments made to merchants and service providers and is used to ensure that income from these transactions is reported to the IRS.  

In 2025, the 1099-K reporting threshold will be set at $600 for payments received for goods and services. This is a major change from 2024’s threshold of $5,000 and a massive change from previous years with a threshold of $20,000. Remember, you must report all income even if you don’t receive Form 1099-K. Failing to report income can result in penalties and interest.  

Keep in mind that Form 1099-K does not account for deductions like fees or refunds. Taxpayers are responsible for reporting their taxable income based on the net amounts after deducting allowable expenses. For more detailed information on Form 1099-K, you can check the IRS website or consult with a tax professional. Optima Tax Relief has over a decade of experience helping taxpayers with their tax needs. 

If you need tax help, contact us today for a Free Consultation 

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