Gig workers: What to know about 1099-K changes

If you get payments through a mobile app or credit card you may — or may not — have received a 1099-K form. The income threshold for the form has changed, so CPA and TurboTax Expert Miguel Burgos helps clear up the confusion. Watch the video above or read the transcript below.

Video transcript:

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Tracy Byrnes: Well, there are a ton of gig workers out there these days. And don't think they get off scot free from filing tax returns. Just because they live a very simple life, in some instances, the IRS still wants their cut. CPA and TurboTax expert, Miguel Burgos, is here with us right now to talk about this.

All right, so the first thing these people need to know is that they're going to receive a different form in the mail. And it's called the 1099-K. Who gets this?

Miguel Burgos: Well, Tracy, the 1099-K, it's a form that will be received by those taxpayers that had received payments through third party payment processors. So that means people that receive payments through mobile apps or through credit and debit cards. It's now with the shared economy, we see more and more people using this kind of payments. And also, we see more and more people that, with the new thresholds, will be likely to receive a form 1099-K.

Tracy Byrnes: Right. And so what are the new thresholds? Because they were higher at one point, weren't they?

Miguel Burgos: Correct. Well to be honest, Tracy, during the last, I would say, two or three years, we've seen the IRS going up and down with the threshold and trying to help the taxpayers with the transition. Previous tax year, the filing threshold was $20,000 and 200 transactions. And once they surpass the $20,000 and had over 200 transactions, the IRS would require this third party payment processing companies to send the 1099-K form.

Now, for this year, 2024 that we're filing now in 2025, it's once you go over $5,000, regardless of the amount of transactions, you are very likely to receive for 1099-K. It is also likely the IRS has announced that amount, that threshold, will keep going down for the next couple of years, down to $600. But for this 2024 tax year filing filed on 2025, it's once you hit more than $5,000, you're very likely to get that form 1099-K, if you receive payments through debit cards, credit cards, or mobile apps.

Tracy Byrnes: Right. OK. So when these people receive these forms, what do they actually do with them? I mean, we don't want them to panic or anything. So they have to report something clearly.

Miguel Burgos: Correct. And something to remember is that 1099-K is considered an informational return, which means, you know, it's a measure that the IRS has in place to monitor how the funds are being transferred and how can taxpayers that are mostly self-employed or that has their own business can potentially be generating any sort of income?

So remember, let's say, for example, that a taxpayer gets a 1099-K reporting $6,000 that were paid through how any of these mobile apps or credit or debit card. It doesn't mean that your business has exactly $6,000 worth of income. But it gives you a general idea and it gives the IRS a general idea what are they looking for when they look into how much income your business had?

So although you might get this, or some taxpayers have perhaps had less than $5,000 and don't get a 1099-K, still it's your responsibility to figure out, to keep track of your income and expenses throughout the year and report them accurately while keeping in mind that some of it, either through a form 1099-NEC or a form 1099-K will be reported to the IRS.

Tracy Byrnes: Right. So bottom line, everything's reported to the IRS, reported on your tax return. And if you need help, there's definitely products out there to help you. Correct?

Miguel Burgos: Correctly, if you have any questions about this form, remember turbotax.com? Either you'll have resources or you can actually talk to a tax expert, just like we're talking right now, to answer your questions and make sure that you finish your return. You do it with confidence and either reduce it as much as possible, your balance due in terms of taxes or getting your best possible tax refund.

Tracy Byrnes: Amazing. Miguel Burgos, CPA and TurboTax expert. Thank you for sharing all of that.

Miguel Burgos: My pleasure. Have a good one.

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Editor's Note: The content was reviewed for tax accuracy by a TurboTax CPA expert for the 2024 tax year.