Selling items online? Get the latest on a key tax rule change

Selling online and taxes: What you should know:

Payments sent via apps and online platforms, such as Venmo, eBay, or others can trigger a tax form for the person who received the payments. The rules for when the form is sent has changed — and then changed again.

What’s changed and what applies for 2023 tax returns:

While 2021 legislation intended to lower the amounts that trigger a form, those changes have been delayed for 2022 and 2023. As the IRS announced, the rules for 2023 tax returns (filed in 2024) require a form to be sent when you have over $20,000 in payments and over 200 transactions.*

*The original changes to Form 1099-K thresholds were part of changes from the American Rescue Plan Act passed in March 2021.

File confidently at tax time with help from the tax experts

Still expecting to get form 1099-K?  Don’t sweat it. We’re here to help. No matter what triggers your Form 1099-K, you can count on H&R Block to help you navigate any income you received from an online platform.  

Digital Payment and Seller FAQs

I’ve never heard of a 1099-K. What is that form?

Form 1099-K is an IRS form that shows money received for goods and services from certain third-party sites, such as payment apps, rideshare services, or other credit or debit card processing sites. If you have enough payments that fall into this category, Venmo, Facebook Marketplace, eBay, Etsy, or whichever service you work with will send you the form mentioned above by January 31.   

Why was the new rule delayed?

According to the IRS, the new rule was not intended to track personal transactions such as paying friends or family for bills, or sharing the cost of a ride, gifts or tickets. The delay gives taxpayers and businesses more time to understand and prepare for the changes. This extra time will decrease the likelihood tax forms will be sent for personal transactions.

Do I have to pay tax on the amount that will be reported in 1099-K? 

It depends. If you’ve sold an item and made money on the sale (whether in your business, hobby, or a capital gain on your personal items), then you may owe taxes. However, you likely won’t pay taxes on the total amount shown on your 1099-K.

For example, your form may show a $100 transaction for the comic book you sold, but for your taxes, you’ll factor in what you originally paid plus any fees, which would likely lower your taxes owed. Find out more about capital gains.

The platform I used asked me to fill out a W-9. Why is that?

The W-9 form is used to get an official record of your Social Security number (or other tax ID number). If the app or online site you use is required to send you a 1099-K, they need to have documentation of your tax ID on Form W-9.

How can I get ready for my 2025 tax filing? What do I need to do now?

You should keep receipts and other documentation related to payments for goods and services. If you’re reselling collectibles, it’s helpful to know what you paid for them. Don’t have your receipt? Don’t worry. There are other ways to estimate this information.

I’m not running a business, just clearing out stuff I don’t need. How do I report this?

If you’re not running a business, it makes it a little easier. If you’re selling items for less than what you bought them for, you won’t get to take money off your taxes. But, if you made money on your sale(s), you’ll report it to the IRS on Form 8949 and Schedule D.

I no longer file a tax return due to my status (retired, disabled, etc.) and am just selling personal items. Will I have to file one now? 

If you haven’t been required to file taxes, it may be because your income was under a certain amount. If you have capital gains, like the ones described in the questions above, that income may push you over the limit. Review how much you have to make to file taxes.

I buy and sell mostly related to my hobby. Will I be considered a small business owner now?

No one factor determines if you should be considered a business. If you make a profit is one consideration, but there are actually several others, including your expertise and the time you spend on your activity.  To dig deeper into whether or not the IRS may see you as a business, review our post on hobby taxes.

Final note: You’ll report hobby income on your tax return, but you won’t be able to deduct hobby expenses like you would be able to deduct business expenses.

What if I am running a business? How will that change my taxes?

If you’re selling as part of business activities, you’ll have a few new considerations for your taxes. This includes paying estimated taxes and filing Schedule C.  Sound daunting? Don’t fret! Block Advisors, a part of H&R Block, has the expertise to cover all your small business tax needs.

Learn more about Block Advisors small business tax services.