Will PayPal report my sales to the IRS?

Information provided by PayPal is not intended to be and should not be construed as tax advice. For questions about your specific tax situation, please consult a tax professional.

Payment processors, including PayPal, are required to provide information to the US Internal Revenue Service (IRS) about customers who receive payments for the sale of goods and services above the reporting threshold in a calendar year.

Will I have to pay taxes when sending and receiving money on PayPal - what exactly is changing?

You’ll get a 1099-K if you receive more than $20,000 and 200 transactions for goods and services in a calendar year.

You’ll also get a 1099-K if any of your payments were subject to backup withholding, even if you didn’t reach the reporting threshold.

Here’s some more detail on the 1099-K threshold change:

• Previously, the American Rescue Plan Act of 2021 had lowered the 1099-K reporting threshold to $600. However, in the following years, the IRS issued a series of deferrals and a plan to gradually transition to the reduced threshold. In 2025, the One Big Beautiful Bill Act restored the original reporting threshold of $20,000 and 200 transactions.
• This only applies to payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal for dinner, gifts, shared trips, etc.
• This reporting is required when the sender identifies the transaction as being for goods and services, even if it was a mistake. Although this transaction is reportable by PayPal, it’s possible that the transaction is not taxable. It’s always best to speak with a tax professional for any specific concerns you may have.
• If you accept payment for goods and services in crypto assets such as PYUSD, as opposed to fiat currency, and meet the reporting threshold, you’ll receive a separate 1099-K reporting those transactions. Fiat is a government-issued currency, like the U.S. dollar, that is backed by the government that issues it.
  

For residents in Illinois, Maryland, Massachusetts, Vermont, or Virginia

If you live in the following US states, you’re subject to a lower reporting threshold for state 1099-K reporting purposes:

* Please note that state revenue/tax agencies may still be in the process of updating their reporting requirements for the current tax year. This information is subject to change and will be updated as needed.

The reporting threshold for Maryland, Massachusetts, Vermont, and Virginia is $600 USD in gross payment volume from sales of goods or services in a single calendar year, regardless of the number of transactions. The reporting threshold for Illinois is over $1,000 USD in gross payment volume from sales of goods or services in a single calendar year and four or more separate transactions.

The Form 1099-K that you receive is based on your primary address on the last day of the previous tax year. If you changed your primary address to one of these states after that date, your account activity will be captured in Form 1099-K reporting for the following tax year.

What is a Goods and Services payment with PayPal?

Both PayPal and Venmo offer a way for customers to tag their peer-to-peer (P2P) transactions as either personal/friends and family or goods and services by choosing the appropriate category for each transaction. Users should select Goods and Services whenever they are sending money to another user to purchase an item, like a couch from a local ad listing or concert tickets, or paying for a service. These transactions are also eligible for coverage under PayPal and Venmo’s Purchase Protection Program. Goods and services payments are designed to provide both buyers and sellers peace of mind, knowing that they may be covered if the transaction doesn’t go as expected.

Find out more about PayPal Goods and Services transactions and Venmo Goods and Services transactions. Terms and conditions apply.

Will these rules apply if I sell personal property, like a couch or an item at a garage sale, if it was sold for less than its original value? Will I be issued a Form 1099-K?

Form 1099-K is an IRS informational tax form that is used to report goods and services payments received by a business or individual in the calendar year. While payment service providers, like PayPal and Venmo, are required by the IRS to send customers a Form 1099 K if they meet the threshold amount, there are certain amounts included on the form that may not be taxable. PayPal is required to report the total gross amount of payments received for goods and services, which can include:

• Amounts from selling personal items at a loss
• Refunded amounts
• Processing fees

However, certain amounts may not be considered taxable income to you. We encourage customers to speak with a tax professional when reviewing their 1099-Ks to determine whether specific amounts are classified as taxable income.

What is Form 1099-K?

Form 1099-K is an IRS informational tax form used to report payments received by a business or individual for the sale of goods and services that were paid via a third-party network, often referred to as a Third Party Settlement Organization (TPSO), or credit/debit card transaction. The IRS requires TPSOs, such as PayPal and Venmo, to issue a Form 1099-K, which shows the total amount of payments settled through a TPSO in the calendar year. Taxpayers should consider this amount with their tax advisor when calculating gross receipts for their income tax return. For more information, visit the IRS website. If you meet the IRS or applicable state reporting threshold in a given calendar year, PayPal will send you a Form 1099-K in January of the following year and file this form with the IRS (and state revenue authority, if applicable) by the required due date.

You’ll also get a 1099-K if any of your payments were subject to backup withholding, even if you didn’t reach the reporting threshold.

If you think you're potentially eligible for goods and services tax reporting, you can access your Form 1099-K from your PayPal account around January 31. If you’re eligible, we’ll send you a notification by email once your Form 1099-K is available. Please go to the new PayPal Statements & Tax Center from a desktop or from within the app. Merchants, please visit your Tax Statement Page. You won’t receive a Form 1099-K if you didn’t meet the reporting requirement and didn’t have any backup withholding applied for the tax year.

You’ll also get a 1099-K if taxes were taken from your payments, even if you didn’t reach the sales limit.

If you think you're potentially eligible for goods and services tax reporting, you can access your Form 1099-K from your PayPal account around January 31. If you’re eligible, we’ll send you a notification by email once your Form 1099-K is available. Please go to the new PayPal Statements & Tax Center from a desktop or from within the app. Merchants, please go to your Tax Statement Page. You won’t receive a Form 1099-K if you didn’t meet the reporting requirement and didn’t have any backup withholding applied for the tax year.

What do I need to do if I meet the 1099-K threshold?

PayPal and Venmo will ask customers to provide tax information like an Employer Identification Number (EIN), Individual Taxpayer Identification Number (ITIN), or Social Security Number (SSN), if they haven’t already, as they approach the reporting threshold, so they may continue using their account to accept payments for the sale of goods and services without any issues. If your TIN fails verification, you'll need to complete an equivalent tax form, W-9. If your name and tax ID don’t match IRS records, you may receive a notice from us requesting additional information. 

How does this 1099-K threshold change impact how I use PayPal?

This change should not impact how you use PayPal and Venmo. You can continue to use the PayPal and Venmo platforms as you do right now, and the benefits that are offered by sending money via our goods and services P2P feature – including buyer and seller protections on eligible transactions for PayPal and Venmo.

Will my 1099-K include qualified tips I received?

For tax year 2025, the IRS announced that Forms 1099 will not be updated to support reporting of tip income. Instead, the IRS will be providing additional guidance in the coming months on how you can claim a tax deduction for qualified tips when filing your income tax return.

We are closely monitoring for further regulations and guidance on these changes and will update this page once more information is available.