1099-K
Form 1099-K is the IRS information return that marketplaces and payment processors file to report your gross payment volume for the year. Gross means before refunds, fees, chargebacks and reserves, so the number is always bigger than what hit your bank. After several years of shifting thresholds, Congress restored the original trigger in 2025: more than $20,000 in payments and more than 200 transactions. Established sellers get one from every platform they sell on.
The 1099-K matters because the IRS computer-matches it against your return. If Amazon reports $1.2 million gross and your books show the $890,000 that actually landed in the bank, that's a $310,000 gap the IRS can see. It doesn't mean you owe tax on the gap, refunds and fees are deductible, but you have to be able to reconcile it, line by line, and deposit-based books can't.
Multi-channel sellers collect a stack of these forms: one from Amazon, one from Shopify Payments, one from PayPal, one from Walmart. Each reports gross, each on its own calendar, and together they should tie to the gross revenue in your books. When they don't, the fix runs through settlement reports, not bank statements.
How the threshold moved, and where it stands
The 2021 American Rescue Plan tried to drop the trigger to $600 with no transaction minimum. The IRS delayed that three times, using $5,000 for 2024 as a phase-in, and the 2025 tax law repealed the change outright. The federal threshold is back at more than $20,000 and more than 200 transactions. A few states set lower thresholds for their own copies, Maryland, Massachusetts, Vermont and Virginia among them, so a seller under the federal line can still receive a form. For any seller doing real volume the threshold is academic: you'll get one from every platform, every year.
What to do when the 1099-K doesn't match your books
Start from the form's number and walk down. Gross payments on the 1099-K, minus refunds, minus fees, minus chargebacks and reserve movements, should land on your net deposits, and each step should be a line in your books. If it doesn't tie, the usual culprits are sales tax the marketplace collected (it sits inside the gross on some platforms and not others), year-end timing (a December settlement that paid in January), and reimbursements or shipping credits that got booked as sales.
Never "fix" it by reporting the 1099-K figure as revenue and moving on. That overstates income and taxes you on your own fees. The form is wrong sometimes too: if a platform reported payments under the wrong taxpayer ID, or folded in another account's volume, request a corrected form before filing rather than explaining the gap to the IRS afterward. We wrote a full breakdown in our guide to the Amazon 1099-K, and tying books to 1099-Ks is standard practice in our tax work.
Where this shows up in our work
This isn’t textbook material for us; it’s the day-to-day of keeping seller books right. See how we handle it in practice:
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