Understanding Form 1099-K & How It Affects Influencers and Online Sellers

If you’re a YouTuber, Shopify store owner, TikToker, filmmaker, Amazon seller, dentist, or beauty salon entrepreneur, the IRS’s changes to Form 1099-K should be on your radar. This form can affect how much tax you owe—especially if you’re unprepared.

What Is Form 1099-K?

Form 1099-K, Payment Card and Third-Party Network Transactions, is an IRS tax form issued by platforms that process payments for you. Think of apps and marketplaces like:

• PayPal, Venmo (business use)

• Shopify, Etsy, eBay, Amazon, TikTok Shop

• YouTube (AdSense pays through Google Payments)

• CashApp (business transactions)

The 1099-K shows your gross revenue (before fees, refunds, or expenses). It’s a reporting form, not a tax bill — but the IRS also gets a copy, so they expect you to include that income on your tax return.

Why Creators and Influencers Should Care
Lowered Reporting Thresholds

• 2023 and earlier: Over $20,000 and 200+ transactions

• 2024: $5,000 in gross payments, no transaction minimum

• 2025: Drops to $2,500

• 2026 onward: Expected threshold of only $600

These lower thresholds mean many small creators and businesses—who previously flew under the radar—will now receive 1099-Ks.

Why You Might Owe More Taxes

1. Gross Reporting Means Higher Income on Paper
   The form reports your total payments, not net income. Unless you deduct platform fees, refunds, shipping, and chargebacks, your taxable income looks inflated.

Example: You receive $10,000 through PayPal but have $800 in fees and $1,000 in refunds. The 1099-K still shows $10,000 — so you must track and deduct $1,800 as expenses.

2. Multiple 1099s Can Lead to Double-Counting
   You may receive both a 1099-NEC (from a brand/client) and a 1099-K (from the payment platform) for the same income. Without careful tracking, you could accidentally report it twice.

3. Self-Employment Tax Applies
   Creators are considered self-employed. That means in addition to income tax, you’ll owe 15.3% in Social Security and Medicare taxes.

4. Audit Risk Is Rising
   The IRS matches platform-reported income with your tax return. Any mismatch is a possible red flag.
   👉 Keep receipts, download transaction reports, and reconcile regularly.

   Example Scenario:

A TikToker receives $6,000 in TikTok Shop payments. The 1099-K shows $6,000—all gross.

• Platform fees: $500

• Refunds: $400

• Lighting & software: $800

• Actual taxable income: $6,000 – ($500 + $400 + $800) = $4,300

Without proper documentation, the IRS would assume you owe tax on $6,000, not the accurate $4,300.

What You Should Do

1. Track and deduct legitimate business expenses—always offset the gross.

2. Match your books to the 1099-K—catch reporting errors early.

3. Report all income even if you don’t receive a 1099-K—the IRS requires it.

Bottom Line

Form 1099-K doesn’t automatically mean you owe more taxes — but without good bookkeeping and tax planning, you will. Since the IRS gets a copy of this form, accurate records are your best defense.

Need Help Navigating 1099-K?

As your trusted CPA for Creators, CPA for YouTubers, Shopify Store CPA, CPA for TikTokers, Amazon Business CPA, CPA for Dental Practices, and CPA for High-Net-Worth Individuals, Velin & Associates, Inc. specializes in helping influencers and small business owners optimize taxes and stay compliant.

📌 For more information about our tax planning services, contact us today:
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200
West Hollywood, CA 90046
📞 323-902-1000
📧 dmitriy@losangelescpa.org