I got a 1099-K from PayPal or Venmo. Do I owe taxes on that money in 2025?

Whether you owe taxes on 1099-K income depends on what the payments were for — not just that you received them.

The 2025 reporting threshold:

For tax year 2025, payment platforms like PayPal, Venmo, Cash App, and Etsy are required to issue a Form 1099-K only if you received more than $20,000 in payments AND had more than 200 transactions for goods or services. This threshold was restored by the One Big, Beautiful Bill Act of 2025, reversing the previous $600 threshold that had caused widespread confusion. Note: some states (like Massachusetts, Maryland, Vermont, and Virginia) still have lower thresholds.

When the income IS taxable:

• Payments for freelance work, services, or selling goods at a profit are taxable income
• Side gig earnings (Fiverr, Etsy, eBay reselling, gig economy work) — report on Schedule C
• Rental income received through these platforms — report on Schedule E

When the income is NOT taxable (or not fully taxable):

• Reimbursements from friends or family (splitting dinner, rent, etc.) — these are not income
• Selling personal items at a loss — if you sold a used couch for $150 that you bought for $400, there's no taxable gain (and no deductible loss on personal property)
• Gifts received — not taxable to the recipient

What to do if your 1099-K includes non-taxable amounts:

The IRS knows platforms can't distinguish personal from business payments. When you file, you can offset the 1099-K amount by reporting the non-taxable portion. On Schedule 1 (Additional Income), you'd report the 1099-K amount as income, then use a separate line to subtract the non-taxable portion labeled clearly (e.g., "Personal item sales at a loss" or "Reimbursements").

Record-keeping matters: Keep records of what you paid for items you sell. Basis documentation protects you in an audit.