New 1099-K Rules for 2025: What Creators, Online Sellers & Service Providers Need to Know

Updated IRS FAQs + OB-BBA Changes Explained
By Velin & Associates, Inc.

The IRS has released new and updated Form 1099-K FAQs, reflecting major changes under the One Big Beautiful Bill Act (OB-BBA). These updates affect millions of taxpayers who receive payments through platforms like PayPal, Stripe, Venmo, Shopify Payments, CashApp, Etsy, Amazon, StubHub, and other third-party settlement organizations (TPSOs).

Whether you’re a YouTuber, Shopify store owner, Amazon seller, freelancer, influencer, doctor, dentist, or high-net-worth client, these rules affect how your income gets reported — and how we prepare your tax return.

Below is a clear breakdown of the new rules, followed by real-world examples from clients similar to those we work with at Velin & Associates, Inc.

1. Higher Thresholds for 1099-K Reporting Under OB-BBA

Under the new OB-BBA rules, payment apps and online marketplaces must issue a 1099-K ONLY if BOTH of the following are true:

✔ The taxpayer receives over $200,000
✔ AND completes more than 200 transactions

This replaces the previously planned $600 threshold.

Important:

A 1099-K can still be issued even if thresholds aren’t met, such as when:

• Backup withholding occurs
• A state enforces its own lower threshold
• The payer voluntarily chooses to issue it

This affects creators and small businesses using multiple platforms.

2. Payment Card Companies Must Always Issue a 1099-K

The threshold DOES NOT apply to:

• Credit card payments
• Debit card payments
• Gift card payments

Even one cent of payment card processing requires a 1099-K.

This is especially relevant for:

• Shopify sellers using Shopify Payments
• Amazon sellers receiving credit card-processed transactions
• Dentists & doctors using patient card-on-file system

3. Income Is Still Taxable — Even Without a 1099-K

The IRS reminds taxpayers:

“All income from goods or services is taxable, whether or not it is reported on a 1099-K.”

This applies to:

• YouTubers & TikTokers receiving brand payments
• Amazon FBA deposits
• Shopify payouts
• Medical practice owner service fees
• Freelance video editors, creators, and e-commerce sellers

4. What If You Receive an Incorrect 1099-K?

If the issuer does NOT correct a wrong 1099-K, the IRS allows taxpayers to:

➡️ Report the incorrect amount on Form 1040, Schedule 1,
➡️ Using the special line above Part I dedicated to 1099-K issues.

This begins with 2024 tax year filings.

5. When a Payment Should Be Reported on Both 1099-NEC / 1099-MISC and 1099-K

New IRS clarification:

➡️ If a payment qualifies for BOTH 1099-K AND 1099-NEC/MISC, it must be reported ONLY on the 1099-K.

This avoids double income reporting.

6. Ticket Sales & Personal Items Sold Online

New FAQs explain:

✔ Personal online ticket sales

Each transaction’s gain or loss must be reported separately — even if reported on a 1099-K.

✔ Personal items sold at a loss

If the sale is reported on a 1099-K (even though personal losses are not taxable), taxpayers may:

➡️ Combine all sales
➡️ Report them on Schedule 1, using the designated 1099-K line

This prevents artificially inflated income.

EXAMPLES

Example 1 — YouTuber / TikTok Creator (Third-Party Payouts)

A TikTok creator receives brand payments through PayPal and Stripe but only $18,000 across 75 payments.

Even though she doesn’t receive a 1099-K:
✔ All income must still be reported
✔ We categorize income correctly to avoid IRS mismatches
✔ We help reconcile platform payouts vs. bank deposits

This is common for:
YouTubers, TikTokers, filmmakers, influencers.

Example 2 — Shopify Store Owner (Payment Card Transactions)

A Shopify seller processes mostly credit card transactions through Shopify Payments totaling $90,000.

Even though the seller has fewer than 200 transactions:
✔ Shopify Payments MUST issue a 1099-K
✔ Payment card rules require reporting even for $0.01

We help ensure:
• Gross receipts match platform reports
• Returns & chargebacks are properly deducted
• State-level thresholds are considered

Relevant groups:
CPA for Shopify Store, CPA for Online Commerce, Amazon Business CPA.

Example 3 — Dentist or Doctor (Card-on-File Payments)

A medical practice processes debit and credit card payments from patients and insurance.

Even though it’s not an e-commerce business:
✔ Every card transaction contributes to a reportable 1099-K
✔ No threshold applies

We help:
• Reconcile merchant statements
• Ensure medical reimbursements are not misclassified
• Separate taxable vs. nontaxable patient payments

Relevant:
CPA for Doctors, CPA for Dental Practice, Dentist CPA, Medical Practice CPA.

Example 4 — High-Net-Worth Individual Selling Personal Tickets

A client sells personal concert tickets on StubHub at a loss and receives a 1099-K.

IRS rules:
✔ Non-business losses are not taxable
✔ We report gross sales on Schedule 1
✔ We deduct basis to eliminate taxable “phantom income”

This is increasingly common due to automated 1099-K reporting.

What These Changes Mean for You

The updated 1099-K rules require careful planning, especially for those using:

• PayPal
• Venmo
• Stripe
• CashApp
• Shopify
• Amazon
• StubHub
• Etsy
• Zelle (not reportable, but often confused)

Velin & Associates continually helps clients interpret these rules, avoid IRS notices, and correctly categorize income.

How Velin & Associates, Inc. Helps

Our team provides full support with:

✔ 1099-K reviews and corrections
✔ Reconciling platform payout statements
✔ Determining whether your transactions are taxable
✔ Fixing incorrect 1099-K forms
✔ Preparing accurate Schedule C, Schedule 1, and business returns
✔ Structuring your business to reduce taxable income
✔ Year-round tax planning for creators, ecommerce, and medical businesses

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

CPA for YouTubers | CPA for Shopify Store | CPA for Online Commerce | CPA for Creators | Shopify Store CPA | CPA for Filmmakers | CPA for Amazon Business | Amazon Business CPA | CPA for Dental Practice | Dentist CPA | Dental Business CPA | Online Commerce CPA | CPA for TikTokers | CPA for Doctors | CPA for Medical Practice | CPA for High Net Worth Individuals