If you spent the last few years bracing for a 1099-K to show up after $600 in sales, you can stop bracing. That threshold never took full effect, and the law has now moved in the opposite direction.

For most craft sellers, the practical result is that a form you were expecting will not arrive. The part worth understanding is that this changes almost nothing about what you owe.

What the rule is now

A payment app or online marketplace has to send you a Form 1099-K when your payments for goods and services exceed $20,000, and the number of transactions exceeds 200.

Both conditions have to be met. The IRS states it plainly: third-party settlement organizations are required to report payments “when the total amount of payments you receive for goods or services through the platform exceeds $20,000 in more than 200 transactions.”

So a seller who does $30,000 across 150 orders does not trigger it. Neither does a seller who does 400 orders totaling $12,000. You need both.

Why this kept moving

The American Rescue Plan Act of 2021 dropped the threshold to $600 with no transaction minimum. That is the number most sellers heard about, and it is the number a great deal of advice was written around.

It kept getting delayed. The IRS pushed the effective date more than once and announced interim thresholds while it sorted out implementation, which is why sellers received conflicting guidance depending on which year they were reading about.

Then the One Big Beautiful Bill retroactively reinstated the threshold that existed before the 2021 change. In the IRS’s words, the law “retroactively reinstated the reporting threshold in effect before the passage of the American Rescue Plan Act of 2021.”

That is how a rule can be repealed before most people ever experienced it.

The part that trips people up

Here is the assumption worth correcting, because it is the expensive one.

Not receiving a 1099-K does not mean the income is not taxable.

The IRS is direct about this: “Whether or not you receive a Form 1099-K, you must still report any income on your tax return. This includes payments for any goods you sell.”

A 1099-K is an information return. It tells the IRS what a platform paid you. It is not the thing that creates the tax obligation. Your obligation comes from having earned the income.

If you sold $9,000 of hand-dyed yarn last year and no form arrives, you still report $9,000 of gross receipts. The only thing that changed is that the IRS did not receive a separate copy from your marketplace.

Your books and the form will not match

For sellers who do cross the threshold, expect the number on the form to look wrong. It usually is not wrong; it is just measuring something different from what you track.

A 1099-K reports gross payments. That figure typically includes amounts you never kept:

• Platform and processing fees deducted before payout
• Shipping charges collected from the buyer
• Sales tax collected in some configurations
• Orders that were later refunded or partially refunded

Meanwhile, you are probably tracking net deposits, because net deposits are what hit your bank account. The two will not agree, and the gap can be substantial for a seller with high order volume and low average order value, which describes a lot of craft businesses.

The reconciliation is not complicated, but it has to be deliberate. Start from the gross figure on the form, then deduct fees, refunds, and shipping costs as expenses in the appropriate categories. Do not simply report your net deposits and hope the difference goes unnoticed, and do not report the gross figure without claiming the deductions you are entitled to. Both mistakes are common and both cost money.

Your state may not follow the federal number

Federal is not the whole picture. Several states set their own 1099-K thresholds well below the federal one, some as low as $600 with no transaction minimum, and those requirements operate independently of what Congress does.

A seller in one of those states can be under the federal threshold, receive nothing from the IRS side, and still get a state copy. Check your own state’s rule rather than assuming the federal number governs.

What to do regardless of the threshold

The threshold has now changed twice in five years. Building your recordkeeping around whichever number is current is a losing strategy, because the number is the least stable part of this.

What holds up in every version of the rule:

Keep gross sales, by platform, by month. Not deposits. Gross, before anything is deducted.

Track fees, refunds, and shipping separately. These are the line items that explain the gap between your books and any form you receive, and they are deductible.

Separate business and personal payments. If you use the same payment app for both, tag transactions as they happen. Untangling a year of mixed activity in March is miserable and error-prone.

Keep your own records even when no form arrives. A form is confirmation, not the source of truth. Your books are the source of truth.

Sellers who already do these things were unaffected by the $600 rule and are unaffected by its repeal. That is the point. The threshold determines what paperwork the platform sends. It does not determine what you owe, and it never did.

This article is general information, not tax advice. Rules change, and individual situations vary, so confirm how any of this applies to your business with a qualified tax professional.

Ryan Johnson

Contributor