Why more 1099K forms are going out to taxpayers

RENO, Nev. (KOLO) -The self-employed, or those who are private contractors, know they can receive payment for services in many ways.

These days some clients like to pay with PayPal, Venmo or other apps.

In the past the IRS would send these 1099k forms to those who received $20,000 a year or more this way.

That rule has changed for 2024. The total now is $5000, which means millions more taxpayers will be receiving the 1099K forms.

“That defines you as having received self-employment income,” says Bruce MacKinnon, Jackson Hewitt Team Leader. “And you would need to report the income on the self-employment form, subtract any potential expenses that you incurred while earning it. And the result at the bottom line is taxable income that gets reported on the form 1040 and taxed.”

MacKinnon says those who are self-employed have always been required to report income. He also says the IRS is simply trying to make sure all the reportable income is in fact reported.

The 1099K applies to taxable income, not if you and your friend use Venmo to pay a dinner bill.

“It is a private transaction,” says MacKinnon. “There is a mechanism. They are not supposed to issue a form for that. But certainly, it is going to happen, and there is a mechanism, by making the appropriate entry on a tax form that can be subtracted and not reported as income.”

MacKinnon says for 2026 the IRS is expected to lower the threshold to receive these 1099K forms from $5,000 to $600.

On another tax development: Some taxpayers may have received or will receive in the mail, a letter from the IRS with a special six-digit PIN. That is going to be used by those people who file their taxes electronically. It may be requested because the taxpayer wants extra security on their tax forms. Or it may be by the IRS who understands your social security number has been compromised.

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