Definition
An IRS information form that payment apps, online marketplaces, and card processors send to people who received business payments through them, reporting the gross amount processed for the year. The reporting threshold is set by law and has changed several times, so whether you receive one depends on current rules, but the income is taxable whether or not a form arrives.
Why it matters
A 1099-K reports gross receipts, before refunds, fees, and the cost of what you sold, so the number can look far larger than your actual profit. Personal transfers between friends are not supposed to be reported, but mislabeled payments sometimes are, and you have to reconcile the form with your own records.
Example
A seller moves $9,000 of used furniture and electronics through an online marketplace and receives a 1099-K for $9,000. Their records show the items originally cost $14,000, so there is no taxable gain, and they report the $9,000 with an offsetting entry for personal items sold at a loss rather than paying tax on the full amount.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.