Yes, you must report all income, but if a 1099-NEC and 1099-K represent the same earnings, you must not double-count them. Report both forms on your tax return (usually Schedule C) to ensure the IRS matches records, then create an adjustment/expense entry (e.g., "Duplicate 1099-K income") to subtract the 1099-K amount.
You must report all income you receive on your tax return. This may include the gross payment amount on Form 1099-K and amounts on other reporting documents like Form 1099-NEC or Form 1099-MISC.
A 1099-K only applies to companies that process transactions through a payment card, app or online marketplace. Employers might receive a 1099-K for collecting payments, but most don't have to prepare one. The 1099-NEC form is more common.
Even if you don't receive a 1099-K, but know that you earned money from your freelance, gig work, or self-employment, it must be reported on your tax return. If you don't report earned income, you risk penalties and interest with the IRS and possibly your state.
It's possible to get a 1099-K for personal transactions or other nontaxable activity, especially if a payment app or marketplace can't tell if a payment is personal or business-related. Receiving a 1099-K doesn't automatically mean you owe taxes on those payments. You're only taxed on actual profits or business income.
1099-K form: This form is issued to drivers who earned over $20,000 in unadjusted earnings from rides and deliveries AND had more than 200 transactions. 1099-NEC form: This form is issued to drivers who received $600 or more from non-rider activities, like referrals and promotions.
If you received income from goods, services or property, you must report it to the IRS — no matter the amount, the means of payment or whether you received a 1099-K or not. A 1099-K is just intended to make it easier to assess what your liability from certain platforms is for the tax year.
As a 1099 contractor, you pay more taxes than a full-time employee because you pay the full 15.3% in FICA taxes, which employers normally split with employees. A W-2 employee has half of this 15.3% share contributed by the employer. As a self-employed individual, you don't have this privilege.
Key Takeaways
If a business intentionally disregards the requirement to provide a correct Form 1099-NEC or Form 1099-MISC, it's subject to a minimum penalty of $660 per form (tax year 2025) or 10% of the income reported on the form, with no maximum.
Nonemployee compensation and the 1099-NEC form
The 1099-NEC only needs to be filed if the business has paid you $600 or more for the year.
You receive a Form 1099-MISC, 1099-NEC, or 1099-K reporting any non-employee compensation, freelance work, or self-employment income you were paid. Attaching these forms reports your earned income from these sources.
So, if you get a 1099-K for less than the threshold, don't panic. It doesn't automatically mean you owe taxes on those payments — it just means the payment platform reported your transactions to the IRS (and possibly your state).
Will the IRS catch a missing 1099? The IRS knows about any income that gets reported on a 1099, even if you forgot to include it on your tax return. This is because a business that sends you a Form 1099 also reports the information to the IRS.
You may wonder how to report 1099-K income on your tax return. Thankfully, the IRS doesn't require you to separately report the amount from every Form 1099-K on your return. However, the IRS may question businesses with smaller-than-expected income based on its analysis of Forms 1099-K reported to the business.
If you don't file a required 1099-K (or other 1099s), the IRS can penalize you with fines ranging from around $60 up to several thousand dollars per form, depending on how late it is, with higher penalties for intentional disregard, plus interest, as the IRS receives copies and can match it to your return. Even if you don't receive the form, you still must report the income, or you risk penalties and interest for underreported income, which the IRS will likely catch and bill you for.
1099-K vs. 1099-NEC are both IRS forms for independent income, but differ by payment source: 1099-K reports digital payments (cards, apps like PayPal/Venmo) from payment processors, while 1099-NEC reports direct payments (checks, cash, ACH) for services to freelancers and contractors by the hiring business, with the threshold for NEC being a much lower $600 (compared to K's higher thresholds). You might get both for the same work if paid partly digitally and partly directly, but you only report the income once, usually on Schedule C.
Use your business account for business purposes and your personal account to receive payments for personal transactions. Otherwise, personal payments will end up on your business's Form 1099-K, and you or your tax professional will then have to sort out personal and business payments when preparing your tax return.
You may receive a Form 1099-K even when total payments or transactions are less than the reporting threshold. No matter the amount of reported payments, if you receive payments for selling goods or services, you must report all income on your tax return.
The 1099-K shows payments from your Uber Eats customers for deliveries. You'll get a 1099-K if you earned $20,000 or more from on-trip transactions. You'll get a 1099-NEC if you earned at least $600 from non–Uber Eats user payments, like referrals or promotions.
For the 2025 tax year, the Form 1099-K reporting threshold reverts to the prior standard: payment apps and online marketplaces must issue a 1099-K only when you receive over $20,000 in gross payments AND more than 200 transactions for goods and services. This change, reinstated by recent legislation, means the temporary lower thresholds set for earlier years are no longer in effect, though some states have their own lower requirements.
If you're a 1099 contractor, no taxes are withheld from your payments. You're responsible for paying self-employment tax (15.3%) and making quarterly estimated tax payments to the IRS.
To avoid the 22% tax bracket (or any higher bracket), focus on reducing your taxable income through strategies like maxing out 401(k)s and HSAs, deferring bonuses, tax-loss harvesting, smart charitable giving, and strategic asset location, understanding that higher rates only apply to income within that bracket, not your entire income.
1099 payments generally do not have federal income tax withheld, but you may be subject to backup withholding if you didn't provide your tax identification number when you set up your payment-processing account with the organization issuing the 1099-K.