The "new $600 tax rule" refers to recent changes and delays for IRS Form 1099-K reporting for third-party payment apps (like Venmo, PayPal, Zelle) for goods/services, which was supposed to kick in at $600 but got phased in, then ultimately repealed by the One, Big, Beautiful Bill (OBBBA) in mid-2025, reverting the threshold back to the original $20,000 and 200+ transactions for now, providing relief for gig workers and casual sellers from burdensome reporting, though all income must still be reported.
The $600 rule on 1-(844)-314-8377 (US/OTX) Cash App means that if you receive $600 or more in a year for goods or services, the IRS must be notified. Cash App issues a Form 1099-K 1-(844)(314)(8377), and you're required to report these 1-(844)-(314)-(8377) (US/OTX) earnings as taxable income on your tax return.
The One Big Beautiful Bill Act of 2025 repeals the $600 threshold set by the American Rescue Plan Act of 2021, returning the Form 1099-K reporting threshold to $20,000 and 200 transactions.
For the 2025 tax year, you'll generally receive a Form 1099-K from platforms like eBay, Etsy, and payment apps if you have over $20,000 in gross payments AND more than 200 transactions, but you must report all income (even small amounts) if it's for goods/services, as you're taxed on profit, not just when you get a 1099-K, with lower state thresholds possible.
Despite all the publicity surrounding Internet commerce, one essential fact that is often overlooked is that there is no general tax exemption for sales of tangible personal property (merchandise) made over the Internet (Internet sales).
Form 1099-K Reporting Reverts to Original Thresholds
The IRS delayed implementation of these changes, most recently stating that it would impose a $2,500 threshold for 2025. Section 70432 of the new Act, however, reinstates the $20,000 and 200 transactions thresholds for required reporting, retroactive to 2022.
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.
The IRS e-file shutdown 2025 begins on Friday, December 26, 2025, at 11:59 A.M. Eastern Time. During this annual maintenance period, the IRS takes its electronic tax filing system offline to update systems and prepare for the new tax year. The IRS announced it will officially reopen e-file on January 26, 2026.
The "20k rule" refers to the traditional IRS threshold for reporting income from payment apps and online marketplaces on Form 1099-K: over $20,000 in gross payments AND more than 200 transactions in a calendar year. While a law (the American Rescue Plan) temporarily lowered the threshold to $600, recent legislation, the One Big Beautiful Bill Act (OBBBA) (OBBBA), has reinstated the $20,000/200-transaction rule for tax years starting in 2025, providing relief for casual sellers and gig workers.
Not reporting all of your income is an easy-to-avoid red flag that can lead to an audit. Taking excessive business tax deductions and mixing business and personal expenses can lead to an audit. The IRS mostly audits tax returns of those earning more than $200,000 and corporations with more than $10 million in assets.
Does Zelle Report Payments to the IRS: Form 1099-K Details. IRS Form 1099-K reports payments received for goods or services during the tax year from credit, debit, or stored value cards and TPSOs. The 2025 reporting threshold is $2,500 or more, which will be reduced to $600 in 2026.
Independent contractors must report all income as taxable, even if it is less than $600." If you fail to report your income, it can result in hefty penalties.
If you sell something for more than you paid for it, you will pay Facebook Marketplace taxes on the profit. Profits from personal items may need to be reported on: IRS Form 8949, Sales and other Dispositions of Capital Assets. Schedule D (Form 1040), Capital Gains and Losses.
If you don't file or report income from a 1099-K (or any income source), the IRS can discover the mismatch, leading to penalties and interest charges, as they match forms filed by payment processors against your tax return. You'll likely receive an IRS notice proposing adjustments, and penalties for late filing of the 1099-K itself range from significant fines per form (e.g., $60-$310+) for standard errors, to much higher amounts for intentional disregard, plus interest on unpaid amounts.
Though all companies will issue you a 1099-K form once you earn or receive $600, you only have to pay tax if it's income from customers or clients.
Unemployment compensation generally is taxable. Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.
The federal self-employment tax is 15.3%, so you could save money if your income from an activity or pastime qualifies as hobby income. And if your activity generates less than $400 in 2025, you don't need to pay self-employment taxes, even if your income doesn't qualify as hobby income.
Key takeaways
Whether or not you have to pay income taxes on eBay sales depends on the nature of your sales. If your eBay gross sales add up to more than $20,000 and 200 transactions in a year, eBay will send you a Form 1099-K, which lists the total amount of payments you received throughout the year.