How Do You Offset a 1099-K (Especially for Businesses)

Received a 1099-K form and don’t know how to report or offset it? You are not alone. Many freelancers, sellers, and even casual users of platforms like eBay, Ticketmaster, Venmo, and Cash App are suddenly facing unexpected tax forms. These forms are directly impacting your tax bills. However, you can write them off, and we are going to discuss it in this blog.

Let’s walk through what a 1099-K is and what’s changing in 2024 and 2025. Most importantly, how can you offset this income properly? Especially if you’re not running a formal business.

What is a 1099-K?

All payments processed through third-party networks are reported on a 1099-K. That’s basically the purpose of the form. You can typically expect it from PayPal, Square, Cash App, and Stripe. 

IRS 1099-K Threshold: 

Generally, you need to report 1099-K if it exceeds a certain dollar amount or transaction. Ideally, businesses receive it more often than individuals. Here are previous and new limits set by the IRS:

• 1099k Threshold 2024: limit was set to $5,000. 
• 1099K Threshold 2025: Current threshold is $600.

The limit was $20,000 and 200 activities before 2024. However, the IRS tightened the tax limit for 1099-K, making more individuals pay taxes on online purchases. 

Platforms That Report 1099-K to the IRS:

Here’s a quick look at platforms that are now sending 1099-Ks:

• eBay 1099-K (2024 and beyond): The resellers hitting $5,000 and above are being issued forms.
• Cash App & Venmo tax reporting 2025: Business accounts and personal transactions tagged as “goods or services” are being tracked.
• Square & Stripe: Already report to the IRS if thresholds are met.
• Uber: Some drivers report not receiving 1099-K or 1099-NEC, but you should check your dashboard for downloadable forms.

Received a 1099-K But Not a Business?

That’s totally fine. Many are now receiving these forms despite not operating a formal business. It’s due to a lower threshold of Form 1099-K. This is especially true for casual sellers or side hustlers. Even if you are a hobbyist and have no formal business structure, this form can be expected. For instance, you sold your old concert tickets on Ticketmaster. As a result, you have a Ticketmaster 1099 showing $1,200 in income. Though you only made $100 in profit.

How to Offset a 1099-K?

This is where smart tax strategy comes in. Here’s how to legally offset that income step by step:

Report All Related Expenses

If you received a 1099-K for eBay sales or side gigs:

• List your expenses, including shipping, platform fees, and inventory cost.
• Report these on Schedule C if considered self-employment income.

Use “Other Income” If Not a Business

If it’s clearly not a business, you can report the income on Form 1040, Line 8z, with an explanation and offset the cost basis. For example:

• Sold used electronics for $300 (reported on 1099-K)
• Original cost: $500
• No taxable income, but you must explain.

Heads Up! Don’t ignore the form. The IRS receives a copy and expects you to reconcile it.

Correct Errors

Think your Ticketmaster 1099 shows the wrong amount? Request a correction. Errors often happen with misclassified transactions.

Final Thoughts for B2B Tax Filers

If you’re a business receiving multiple 1099-Ks from platforms, reconciling them properly with bookkeeping is crucial. You can use E-File Workforce Payroll software to effortlessly file these forms. Our software automatically flags common errors, saving you time and effort. So, don’t wait until tax season. Start tracking now! 

Read more about other forms such as 1099 vs W2.

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