For people who made money online in 2024, a new piece of paperwork may be needed for this season’s tax return.

The latest addition to look out for is Form 1099-K, which applies to people who collected money from goods and services via online third parties and payment card companies.¹ Recent updates to qualifying thresholds could see more people receiving one or several of these forms for the 2024 tax year.

Who will get a 1099-K

People who earned more than $5,000 in 2024 selling goods and services (such as for tickets or freelancing) should expect to get a 1099-K tax form. Previously, payment companies had to send these forms to users who earned more than $20,000 in many cases.²

The American Rescue Act of 2021 changed the reporting requirements for the 1099-K form, and to ease the transition for both the IRS and taxpayers, eligibility limits will be phased in, setting the $5,000 threshold for the 2024 tax year, $2,500 for 2025, and $600 for 2026.³

More people may use these apps and online platforms to get paid in their everyday lives as the labor market shifts. The majority of Americans (52%) are turning to a side hustle or second job to add to their income, according to Empower research.

Read more: 8 passive income ideas to help grow your wealth

Also on the receiving end of a 1099-K tax form could be some of the 33 million small business owners in the U.S. collecting customer payments. As of 2023, about 95% of small business owners said they’d go cashless “someday,” while more than half (51%) anticipated going digital-only over the next two years.⁴

What the 1099-K covers

The tax form covers payments that people have received from third-party payment providers and credit and debit card networks. Companies sending these forms can include:⁵

• Ticket exchange or resale sites, such as Ticketmaster and Stubhub

• Ride-hailing platforms like Uber or Lyft

• Crowdfunding services like GoFundMe

• Online marketplaces such as eBay or Etsy

Another notable category that falls into the 1099-K bucket is peer-to-peer payment platforms, such as PayPal and Cash App.⁶ Users who received payments through these apps for goods and services may see a 1099-K arrive if they’re eligible. The spread of digital wallets has been growing, with Empower research finding that 1 in 4 Americans (26%) use digital payments weekly.

How the 1099-K affects tax return filing

Once 1099-K forms arrive, the nature of the sales come into play when reporting income for a tax return. It could be that a personal item was sold, and including that amount on a return can depend whether it was done for a profit or at a loss. The tax treatment for payments received through credit/debit cards, payment apps, or online marketplaces can also be specific to each situation.⁷

Following the steps provided by the IRS⁸ can be key to complete an accurate tax return, as the results of a 1099-K form can affect adjusted gross income (AGI).

Read more: 2024 & 2025 federal tax brackets and income tax rates

Accounting for it all

A 1099-K form can be just one part of the many elements needed to file a tax return. Seeking the help of a financial advisor or tax professional could help keep the necessary pieces from turning into a bigger tax puzzle.