Are Venmo, PayPal, and Cash App Payments Taxable? The 1099-K Rules for 2026

If you have sold anything on eBay, collected payments through Venmo, or used PayPal for freelance work, you may have heard that the IRS was about to start requiring platforms to send you a tax form for transactions over $600. Congress repealed that rule in July 2025, and the reporting threshold is back to where it was before 2021.

What has not changed is the underlying tax obligation. Whether or not you receive a Form 1099-K, income you earn through these platforms is generally taxable. The confusion between what platforms are required to report and what you are required to report is where most people get this wrong.

A 1099-K Reports Payments, Not Taxable Profit

Form 1099-K is an informational return issued by third-party settlement organizations, the IRS term for payment platforms like PayPal, Venmo, Cash App, eBay, Etsy, and Amazon. The form is sent to both you and the IRS when your payments through the platform exceed a reporting threshold.

The form reports gross payments received. It does not account for your costs, fees, refunds, or non-taxable transactions. It is not a bill and it is not a determination that you owe tax. It shows the payments processed under your name so the IRS can compare that amount with your tax return.

The $600 Rule Is Gone. Here Is What the Threshold Actually Is.

In 2021, Congress passed a law that would have required platforms to issue Form 1099-K for any user who received more than $600 in payments for goods or services, with no minimum number of transactions. The IRS delayed implementation repeatedly from 2022 through 2024, and the rule was phased in at higher thresholds in the interim.

The One Big Beautiful Bill Act, signed into law on July 4, 2025, repealed that lower threshold entirely and restored the original rule. As of 2025 and going forward, a platform is required to issue Form 1099-K only when a user receives more than $20,000 in gross payments AND completes more than 200 transactions in a calendar year. Both conditions must be met. A seller who moves $25,000 through a platform in 150 transactions does not trigger the requirement. A seller with 250 transactions totaling $18,000 does not either.

One important exception: if you accept credit cards, debit cards, or other payment cards, there is no minimum threshold. Payment card processors are required to issue Form 1099-K for any amount, including transactions well under $600. That rule has not changed.

New York reporting generally follows the federal Form 1099-K framework, although platforms may issue forms below the federal threshold in some circumstances. If you receive a form you did not expect, confirm with a tax professional before assuming it is an error.

If you were bracing for a 1099-K at the $600 level, that threshold is gone. If you are a casual eBay seller, someone who collects payments from friends on Venmo, or a small-scale freelancer who does not come close to $20,000 through any single platform, the platform is likely not sending a 1099-K to the IRS about you.

The Threshold Is a Reporting Rule, not a Taxability Rule

The $20,000/200-transaction threshold determines what the platform has to report to the IRS. It does not determine what you have to report on your tax return. Those are two different questions, and mixing them up is the most common mistake people make with these platforms.

If you earned $5,000 selling handmade goods on Etsy and the platform did not issue a 1099-K because you were below the threshold, that $5,000 is still taxable income. The IRS not receiving a form about it does not make it non-taxable. Self-employment income, freelance payments, and income from selling goods at a profit are taxable whether or not a 1099-K shows up in January.

Personal Payments Are Not Income

Not every payment that flows through Venmo or PayPal is taxable, and this is where a lot of the anxiety around these platforms is misplaced. The following are not income and are not taxable:

• Splitting a dinner check or a vacation expense with friends

• A friend or roommate reimbursing you for their share of a jointly paid expense

• A family member reimbursing you for a shared purchase

• Selling a personal item, such as a piece of furniture or old electronics, for less than you originally paid for it

The platforms can distinguish between personal payments and business payments in many cases, but they do not always get it right. If you receive a 1099-K that includes payments that should not have been reported, first contact the platform and request a corrected form. If the platform does not correct it, the amount may still need to appear on your return with an offsetting adjustment and an explanation. Keep records of what each payment was actually for. Those records are your support if the IRS asks.

When eBay, Etsy, and Marketplace Sales Are Taxable

Selling personal property at a loss is not taxable. If you paid $400 for a camera five years ago and sold it on eBay for $200, there is no taxable gain. You disposed of a personal asset below your cost.

Selling personal property at a gain is generally taxable. If you bought something as a collector's item or investment and sold it for more than you paid, the difference is a capital gain and it belongs on your return regardless of whether you received a 1099-K.

Selling goods you produced or purchased for resale is business income. Someone who regularly sources products and sells them on eBay or Amazon is operating a business, not conducting garage sales. That income is subject to federal income tax and self-employment tax, and business expenses related to it are deductible.

The question of whether you are an occasional seller or a business matters both for how the income is reported and how much tax applies to it. There is no bright-line rule, but frequency, intent, and whether you are buying to resell are all factors the IRS looks at.

Freelancers and Gig Workers: The Self-Employment Tax Factor

If you work independently and collect payments for freelance or gig services through PayPal, Venmo, Cash App, or any other platform, that income is generally self-employment income. It is subject to federal income tax and self-employment tax, which covers both the employee and employer share of Social Security and Medicare.

The standard self-employment tax rate is 15.3%, generally applied to 92.35% of net earnings, subject to the Social Security wage base and other applicable rules. This applies in addition to ordinary income tax, and it often surprises people who planned only for the income-tax portion.

Estimated tax payments may be required if you expect to owe at least $1,000 after subtracting withholding and refundable credits, particularly if your withholding will not satisfy the IRS safe-harbor rules. A platform not sending you a 1099-K does not change that obligation.

What to Do If You Receive a 1099-K

If your payments exceed both thresholds, the platform is generally required to send you a Form 1099-K after the end of the year. The form reports gross payments, which means it includes platform fees, refunds you issued, and non-taxable transactions. You do not owe tax on the gross figure on the form. You owe tax on the net taxable income after accounting for your actual costs and any non-taxable amounts.

Report the income on your return and subtract the portions that are not taxable or are offset by business expenses. Keep documentation for any adjustments you make. If the 1099-K includes personal reimbursements or other non-taxable payments, those can be backed out, but you need records to support the adjustment if the IRS asks.

Platform Income Has Tax Consequences. Know Yours Before You File.

Form 1099-K reports gross payment activity, not the amount of tax you owe. What is actually taxable, what can be deducted, and how the income should appear on your return depends on the specifics of how you use these platforms.

Gregg Jaffe Tax Services helps freelancers, online sellers, and small business owners across Plainview and Long Island determine what platform income is taxable, what expenses can be deducted, and how Form 1099-K should be handled on the return. Gregg has been preparing taxes for Long Island individuals and small business owners for more than 25 years.

Phone: 516-770-5305

Email: GJaffetax@yahoo.com

Contact online: greggjaffetax.com/contact