Direct Answer
The One, Big, Beautiful Bill retroactively reinstated the pre-2021 reporting threshold, so third party settlement organizations are not required to file Form 1099-K unless gross payments to a payee exceed $20,000 and the number of transactions exceeds 200. You can still receive a 1099-K below those amounts, because a TPSO may report voluntarily, some payment settlement entities have no de minimis threshold at all, and several states set lower thresholds.
Key Takeaways
- The federal TPSO threshold is more than $20,000 in gross payments and more than 200 transactions.
- The American Rescue Plan Act lower threshold was reversed retroactively.
- Both conditions must be exceeded for the TPSO requirement to apply.
- Merchant acquiring entities have no de minimis threshold, so card payments can still generate a 1099-K.
- Income is taxable whether or not a 1099-K is issued.
A threshold that moved three times
Few reporting rules have caused more confusion. The American Rescue Plan Act of 2021 dropped the third party settlement organization threshold dramatically, the IRS delayed enforcement through a series of transition notices, and then the One, Big, Beautiful Bill retroactively reinstated the earlier threshold. The result is that guidance published in between is now out of date, and plenty of it is still sitting on the internet looking authoritative.
The current rule: a TPSO is not required to file Form 1099-K unless the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.
Both Conditions, Not Either
This is the part that gets misread. The federal TPSO requirement applies when payments exceed $20,000 and transactions exceed 200. A seller with $60,000 across 40 transactions does not meet the transaction count. A seller with 500 transactions totaling $9,000 does not meet the dollar amount.
That said, not meeting the threshold does not mean no form arrives.
Why You Might Get a 1099-K Anyway
Voluntary reporting. A TPSO may still issue a Form 1099-K for amounts below the threshold. Many platforms report broadly rather than maintaining two systems.
Merchant acquiring entities. Card processors are payment settlement entities without a de minimis reporting threshold. Card sales can generate a 1099-K at any amount.
State thresholds. Several states set lower thresholds, which can produce a 1099-K even when the federal test is not met.
Backup withholding. If a TPSO performed backup withholding for a payee during the year, it must file Form 945 and a Form 1099-K, and furnish a copy to the payee.
What This Means If You Pay Contractors
There is a second angle here that matters more to businesses than to sellers. If you paid a contractor by credit card, debit card, or through a third party settlement organization, that payment is generally reportable by the payment settlement entity, not by you on a Form 1099-NEC.
Reporting it again creates a duplicate. Your contractor then has two forms covering the same income and has to explain it. Before you file, pull card and platform payments out of your 1099-NEC totals.
What This Means If You Receive Payments
Income is taxable whether or not a form is issued, and that has not changed with any threshold. What changes is documentation. Practical steps:
- Keep your own records rather than relying on platform forms
- Separate personal reimbursements from business sales inside payment apps, ideally with separate accounts
- Reconcile any 1099-K you receive against your own records before filing, since the amount is gross and does not subtract fees, refunds, or chargebacks
- If a 1099-K is wrong, contact the issuer for a corrected form rather than quietly reporting a different number
The Reporting Side
If you are the one issuing forms, the rules for what you file have not moved: build your totals from your own payment records, exclude payments reportable by a settlement entity, and file the correct form for each payment type.
1099 Express supports 1099-K along with the full information return series, with import, TIN matching options, print and mail, and e-filing to IRIS. Start at 1099express.com, email support@1099express.com, or call (361) 884-1500.
People Also Asked
Q: What is the 1099-K threshold now?
For third party settlement organizations, gross payments must exceed $20,000 and transactions must exceed 200 before reporting is required.
Q: Will I still get a 1099-K if I am under the threshold?
Possibly. TPSOs may report voluntarily, card processors have no de minimis threshold, and some states set lower thresholds.
Q: Do I report income if I never receive a 1099-K?
Yes. Taxable income is reportable whether or not an information return was issued.