What to do with a Form 1099-K

I got a 1099-K from Etsy, PayPal or Square. What do I do with it?

Check it, reconcile it to your own records, then report your income. The IRS says Box 1a is the gross amount and is not reduced for fees, credits, refunds, shipping, cash equivalents or discounts; those aren't taxable income and you can deduct them from the gross. If you sell goods or services as a sole proprietor (including freelancers and hobby sellers), the IRS says to report it on Schedule C. A 1099-K doesn't automatically mean the money is taxable, and not getting one doesn't mean it isn't: you must report income even without a form.

Last verified October 29, 2026 against IRS: What to do with Form 1099-K, IRS: Understanding your Form 1099-K. Fee change tracker · How we verify

Why you got one

Card processors, payment apps and online marketplaces must send Form 1099-K to the IRS and to you by January 31. A payment app or marketplace (Etsy, PayPal, Venmo and similar) has to send one when your payments for goods or services total over $20,000 in more than 200 transactions, but the IRS says they may send one at lower amounts. If customers pay you directly by card, your card processor sends one at any amount. You can get more than one if you sell on several platforms. Check where you stand with the 1099-K threshold checker.

Step 1: Check the form

Payee TIN: the last 4 digits of your SSN, ITIN, ATIN or EIN. If your business files Form 1120, 1120-S or 1065 but the form shows your own name and TIN, the IRS says to have it corrected.
Box 1a gross payment amount: the total value of card and third-party network payments, before anything is taken off.

Step 2: Reconcile Box 1a to your records

Use your platform reports, merchant statements and receipts to confirm Box 1a, and pull out the amounts the IRS says can come off the gross. An illustrative example for a seller on one platform:

Line	Amount
Box 1a gross payments	$24,000
Refunds you gave buyers	-$650
Platform and processing fees	-$2,480
Gross after refunds and fees	$20,870

Example numbers only, not a tax calculation. Shipping you charged buyers is in Box 1a too; the IRS lists it with fees and refunds as amounts you can deduct from the gross, so match it to your shipping label costs. How you present refunds, fees and shipping on your return (as returns and allowances or as expenses) is a question for your tax software or preparer; the IRS point is that Box 1a alone overstates your income. For Etsy, the per-order fee breakdown is in your Payment account; see how much Etsy takes per sale and how Etsy handles sales tax.

Step 3: Report it in the right place

Your situation	Where the IRS says it goes
Gig worker, freelancer, hobby seller or other self-employed (sole proprietor)	Schedule C (Form 1040), Profit or Loss from Business
Partnership	Schedule E (Form 1040)
Corporation	Form 1120 or Form 1120-S
Personal items sold at a loss (furniture, a car, clothes)	The loss isn't deductible, but you can zero out the gross: report it at the top of Schedule 1 (Form 1040), or on Form 8949 carried to Schedule D
Personal items sold at a gain	The profit is taxable: Form 8949 and Schedule D

Report everything else too: the IRS says income from goods, services or property must be reported whether or not you got a 1099-K, including cash and amounts on other forms such as 1099-NEC or 1099-MISC. Self-employment income can also mean self-employment tax and estimated payments; see how much to set aside for taxes.

If the form is wrong

You shouldn't have gotten it (gifts or reimbursements from friends and family, not yours, or a duplicate): contact the issuer named under "Filer" at the top left, ask for a corrected Form 1099-K that shows a zero amount, and keep a copy of the original and all correspondence.
The TIN or gross amount is wrong: ask the issuer for a corrected form (or the payment settlement entity shown at the bottom left if you don't recognize the issuer). The IRS says not to contact the IRS, since it can't correct the form.
Don't wait to file. If the gross amount is wrong and no correction arrives, the IRS says to report the amount from the incorrect form in the entry space at the top of Schedule 1 (Form 1040).

To avoid the problem next year, the IRS suggests marking personal payments from friends and family as non-business in the payment app when possible.

Questions

Is everything on my 1099-K taxable?

No. The IRS says Box 1a isn't adjusted for fees, credits, refunds, shipping, cash equivalents or discounts, that these items are not taxable income, and that you can deduct them from the gross amount. Personal items sold at a loss aren't taxable either.

Do I have to report income if I didn't get a 1099-K?

Yes. The IRS says if you received payments for goods, services or property you must report your income even without a Form 1099-K, including cash and other payments not on any form.

Where does a seller report a 1099-K?

If you're a sole proprietor, including a freelancer, gig worker or hobby seller, the IRS says to report Form 1099-K payment information on Schedule C (Form 1040). Partnerships use Schedule E and corporations use Form 1120 or 1120-S.

What is the 1099-K threshold for Etsy and PayPal?

Payment apps and online marketplaces must send a 1099-K when your payments for goods or services total over $20,000 in more than 200 transactions. They may send one for less. Card payments you take directly are reported at any amount.

My 1099-K includes money from friends. What do I do?

Gifts and repayments for personal expenses shouldn't be on a 1099-K and aren't taxable income. Ask the issuer for a corrected form showing zero, keep copies, and don't wait to file.

Should I call the IRS to fix a wrong 1099-K?

No. The IRS says it can't correct your Form 1099-K. Ask the issuer (or the payment settlement entity on the form) for a corrected one, and file on time even if it doesn't arrive.

General information, not tax, legal or accounting advice. Rates change: check the linked official source before you rely on a number. Not yet reviewed by a CPA or EA.