You can finally take a breath of relief in case you panicked every time you sold an old smartphone or assisted a friend to divide a dinner bill using Venmo. The IRS has already canceled the hotly contested $600 reporting requirement for filing taxes in 2026.
With the help of the One Big Beautiful Bill Act (OBBBA), the regulations have been shifted back to a more familiar and higher level. The third-party payment applications, such as Venmo, PayPal, and Cash App, will not be required to provide you with a Form 1099-K at all until the tax year 2025 (taxes you will file in early 2026): you must both receive over 200 transfers and over 20,000 in gross payments. Always look for experts (like the best tax attorneys) who can help you in tax matters.
Check the Issue of the Garage Sale Tax Nightmare
Casual sellers, whether purging an apartment in San Francisco or disposing of old technology gadgets via eBay, were the ones who were spooked by the possibility of a tax nightmare in the past several years. The initial proposal to reduce the threshold to 600 would have inundated millions of non-professional sellers with tax filings that can often just cover even on personal goods or run at a loss.
The new legislation of the OBBBA overturned that plan. The IRS will now be working based on the knowledge that the reporting threshold as of the 2025 tax year will be restored to the historical amounts of 20,000 and 200 transactions. It implies that in case you sold an old couch on Facebook Marketplace at 400, you will not necessarily get a 1099-K for the same next year.
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Finding the Right Solutions
There is, however, a huge cave that most non-professional sellers fall into: the fact that you receive no form does not mean that the income is tax-free.
According to the IRS, all the income is subject to taxation, and it does not matter whether a 1099 was provided to you or not. In case you sold items at a profit, you have to report the profit. On the other hand, in case you made a loss in selling items (which is typical when dealing with personal item flips), you have to demonstrate that you did not realize a profit so that you do not pay taxes on the money that has not been earned as income yet.
You require simplicity to ensure that your records are clean without the IRS snorting over your neck. Below is an example of a “Simplified Ledger” template that one can create in a notebook or Excel now to record their casual sales:
- Date: Date of the transaction.
- Sales Item: A short description (e.g., “Used iPhone 12).
- Sale Price (Income): What the buyer has paid you.
- Original Cost (Expense): The amount you initially paid on the item (or the material cost). This is your “Expense” column.
- Fees: Shipping or the PayPal/Venmo fees.
- Net Profit/Loss: Sale price- Original Cost and Fees.
Tips to Stay Safe
Don’t Commingle: Try to keep personal (such as your mom sending you some money to buy you a birthday present) transactions and business transactions apart. Personal gifts should be registered using the Friends and Family option since Goods and Services are the ones used to create a report. When you have a professional (like an IRS audit lawyer), it will certainly help you in the long run.
Losses of Documents: When selling your old wardrobe at a fraction of the price, make a receipt/screenshot of what you paid in the first place. It is to demonstrate that this was a loss on personal items that you will be asked by the IRS one day as to why you did not claim that $1,000 in Venmo receipts as income.
A 1099-K has a Higher Threshold: Although the threshold is greater, in case you are provided with a 1099-K (due to having a large side hustle), do not disregard it. That income will automatically be matched to your return by the IRS, and any difference may attract audits.
The twenty-thousand-dollar turnaround is a huge success for casual sellers. No need to worry, it may have been absconded, but the tax law is there. Keep that ledger handy.
