Understanding Form 1099-K: What Small Business Owners Need to Know

The New Thresholds (Phased In)

The IRS is rolling this out slowly:

• 2024 tax year: You’ll get a 1099-K if you receive more than $5,000 in payments for goods or services.

• 2025 tax year: The threshold drops to $2,500.

• 2026 and beyond: It’s $600.

  
  

Heads up—some apps might still send you a 1099-K even if you’re under these amounts.

What Counts (and What Doesn’t)

• Business or side hustle payments? Yep, those count, and you’ll need to report them.

• Splitting dinner with a friend or getting paid back for concert tickets? Nope, that’s personal and shouldn’t show up on a 1099-K.

  
  

Credit/Debit Card Payments

If you get paid directly by credit card, debit card, or even gift cards—there’s no minimum. You’ll get a 1099-K no matter what.

The Big Reminder

Even if you don’t get a 1099-K, you’re still required to report your income. The form just makes it easier for the IRS (and you) to keep track, but it doesn’t replace your responsibility to file honestly.

Keeping Track of Your Income

It’s essential to maintain clear records of your business income. This means separating your personal transactions from your business ones. Use accounting software or spreadsheets to help you stay organized.

Why Accurate Reporting Matters

Accurate reporting ensures you pay the right amount of taxes. Underreporting can lead to penalties, while overreporting means you might pay more than necessary. Striking the right balance is crucial for your financial health.

Preparing for Tax Season

As tax season approaches, make sure you have all your documents in order. Gather any 1099-K forms you receive, along with other income statements. This preparation will save you time and stress when it’s time to file.

Seeking Professional Help

Not sure what counts as taxable income (and what doesn’t)? That’s where we come in. At Oddo Financial Services, we help you make sense of forms like the 1099-K, keep your books clean, and ensure you’re not overpaying at tax time.

Conclusion

✅ Bottom line: Keep good records of what’s business and what’s personal. The IRS is phasing these changes in, so expect to see more 1099-Ks coming your way in the next couple of years.

Reach out if you want peace of mind before filing season rolls around. Remember, we’re here to help you navigate the complexities of tax reporting and financial management. Let’s simplify your bookkeeping, tax preparation, and financial consulting needs so you can focus on what you love!