Those who use platforms like eBay and Facebook Marketplace to make a little money on the side will want to pay extra attention this tax season as the Internal Revenue Service implements long-planned changes to its treatment of form 1099-K—which is used to report a variety of online payments.
Anyone who earned $5,000 or more in payments in 2024 on any payment platform, app, or online marketplace must report the income on their tax return this year. That could be from selling products on StubHub, Etsy, eBay, etc., or services on sites like Airbnb. If you’ve sold goods or services on any of these platforms, the companies will send you a tax form called a 1099-K by the end of this month.
Previously, most sellers had to report when their sales reached $20,000 a year. But the IRS is slowly lowering that threshold to just $600: There is a $5,000 threshold for the 2024 tax year, $2,500 for 2025 (reported on next year’s tax forms), and $600 for 2026.
Taxes are owed on profits made, not necessarily all money earned on online marketplaces; if you earn less than what you paid for the item—say, you sell some of your used furniture on Facebook Marketplace—you won’t need to disclose it to the IRS. You do not need to report personal charges to friends and family, like paying for gifts or sending money to children.
Reporting income from online side hustles has always been legally required, but many Americans do not do it. Now, companies are also required to send paperwork to the IRS, meaning underreporting will be easier to catch. It’s like a W2 or 1099 form from an employer, which the IRS has received since the 1940s. Now, the agency has much more information on each seller’s side activity.
“Profits on side income have always been taxable but the IRS decided to change the reporting requirements, they want to make sure people aren’t falling through the cracks and not paying tax,” says Elizabeth Ayoola, personal finance expert at NerdWallet. “If you don’t want the IRS knocking on your door for unpaid taxes, consumers can also cross check their personal records.”
The change comes as more Americans use payment apps like Cash App, PayPal, Square, Stripe, and Venmo for a growing number of transactions, both business and personal (yes, that includes for illicit transactions and theft). Reporting is a little different for individuals and registered businesses, so see a tax professional if you need help.
“Taxes can be confusing for consumers, but it’s better to be clear than confused so if you don’t know what you owe, consider working with a professional,” says Ayoola. “That can be cheaper than paying the IRS penalties for unpaid taxes.”
As an eBay seller, it’s important to be aware that the IRS is cracking down on those who are not reporting their income from online sales. With the rise of side hustles and the gig economy, many individuals are earning extra money through platforms like eBay without reporting it on their taxes.
The IRS has access to information on sellers’ transactions, including sales amounts and payment methods. They are actively pursuing those who are not accurately reporting their income and could face penalties or fines for not doing so.
If you’re an eBay seller, it’s crucial to keep detailed records of your sales and expenses and report them accurately on your tax return. Failure to do so could result in audits or legal consequences.
So, watch out eBay sellers—the IRS is keeping a close eye on your side hustle, and it’s better to be safe than sorry when it comes to reporting your income.
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- eBay sellers
- IRS
- side hustle
- online selling
- tax compliance
- income reporting
- IRS regulations
- eBay business
- tax implications
- small business taxes
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