While the popularity of services like Venmo and Facebook Marketplace are growing, its users could be affected by a tax reporting change.

When selling items on an online platform,  you could expect a tax form if you make over $600 in a year.

The new threshold doesn’t change when somebody owes taxes, but it requires businesses to report to the IRS.

Before the American Rescue Plan Act of 2021, if a person didn't make $20,000 or more, businesses did not need to report the seller to the IRS. Now, that number has changed to $600.

Charles Wells, tax accountant and owner of Charles Wells Tax Service, said the change will mostly affect small businesses and casual online sellers who don’t normally get a tax form.

According to the IRS, “Third party settlement organizations are required to report transactions for goods or services where the total payments received were more than $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and thereafter.”

While some online sellers have already seen the change, the threshold is expected to lower this year.

“It was previously at $20,000. Now they changed it to $5,000 and it should be going to $600 now. So if you have $600 or more in sales through these different platforms, you can probably expect to receive a 1099-K,” said Wells.

Because people send money through platforms like Venmo or PayPal, Wells feels the change could lead to confusion.

“The thing where there could be an issue is if you receive a 1099-K for maybe like a pay service like PayPal or something like that, and it's just like, you know, if someone is sending you money for concert tickets or something like that. That's not a taxable event,” said Wells.

If you receive a tax form for something that isn’t taxable,  you can address it through your tax return.

The IRS requires anyone who gets payments for selling goods, services or selling property to report their income.

“Honestly any kind of income that you have coming in is taxable, whether you receive an income statement or not. So, if you're selling items or services online or through any of these different platforms, you should be reporting that income and paying taxes on it anyways,” said Wells.