If you use third-party payment platforms, like PayPal, Venmo or Cash App, to collect payments for your side gig or business, the Internal Revenue Service (IRS) wants to remind you to report payments of at least $600.

This rule is aimed at individuals who run a side hustle, small business or do part-time work. So if you’re just sending money to friends for a restaurant bill or a vacation, or collecting a one-time payment for selling something online, this won’t apply to you.

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Before 2022, third-party transactions for business owners and side hustlers followed different thresholds: individuals needed to report gross payments exceeding $20,000 and report earnings if they had more than 200 such transactions, according to the IRS. But as a result of the American Rescue Plan Act, any transactions made after March 11, 2021 that exceed $600 must be reported to the IRS, regardless of how many of those transactions you’ve had.

These earnings were already taxable so this is not a change in tax law, but rather just a reporting change.

In order to report these earnings and transactions, you’ll need to file Form 1099-K. According to the IRS, you should receive this form from each third-party payment platform you received transactions through. If you incorrectly receive the form for personal transactions, the IRS recommends you contact the payment platform for a correction or to attach an explanation to your tax return.

How to prepare to file taxes as a business owner

Ink Business Unlimited® Credit Card

  • Rewards

    Earn 1.5% cash back on every purchase made for your business

  • Welcome bonus

    Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening

  • Annual fee

  • Intro APR

    0% for the first 12 months from account opening on purchases; N/A for balance transfers

  • Regular APR

  • Balance transfer fee

    Either $5 or 5% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

  • Credit needed

Blue Business Cash™ Card from American Express

On the American Express secure site

  • Rewards

    Earn 2% cash back on all eligible purchases on up to $50,000 per calendar year, then 1% cash back earned is automatically credited to your statement

  • Welcome bonus

    Earn a $250 statement credit after you make $3,000 in purchases on your Card in your first 3 months.

  • Annual fee

  • Intro APR

    0% for 12 months on purchases from date of account opening

  • Regular APR

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

TurboTax Self-Employed

On TurboTax’s secure site

  • Cost

    Costs may vary depending on the plan selected – see breakdown by plan in the description below

  • Mobile app

  • Live support

  • Better Business Bureau rating

Pros

  • Step-by-step guidance with a Q&A format that is easy to follow
  • TurboTax Live provides on-demand advice and a final review from a tax expert or CPA
  • Live Full Service has a tax expert prepare, sign, and file your return
  • Accuracy and maximum refund guaranteed*
  • Audit support, which provides free assistance if you get an IRS or other tax notice

Cons

  • More costly than other software programs
  • Live expert assistance plans have additional costs

Cost breakdown by plan:

Save an additional $20 on TurboTax Self-Employed – prices below do not reflect discount; click “Learn More” for details

  • Self-employed (for personal and business income and expenses): $89* federal, $39* per state
  • Live self-employed (includes help from tax experts): $199* federal, $49* per state
  • Full Service Live self-employed (includes help from tax experts): $389* federal, $49* per state

*Click here for TurboTax offer details and disclosures

H&R Block

On H&R Block’s secure site

  • Cost

    Costs may vary depending on the plan selected – see breakdown by plan in the description below

  • Mobile app

  • Live support

  • Better Business Bureau rating

Pros

  • Simple step-by-step guidance that’s easy to follow
  • Unlimited on-demand chat or video support with Online Assist plans
  • Ability to speak to a tax expert who has an average of 10 years experience (costs extra)
  • Over 11,000 physical locations so you can meet with a tax expert in-person
  • Maximum refund guarantee, or H&R Block will refund the plan fees you paid
  • Audit support guarantee, which provides free assistance if you get an IRS or other tax notice
  • 100% accuracy, or H&R Block will reimburse you for any penalties or interest up to $10,000

Cons

  • Plans that include speaking with a live tax expert cost more for federal returns
  • One of the more costly software programs

Cost breakdown by plan:

  • Self-employed (for personal and business income and expenses): $91.99 federal, $44.99 per state per state
  • Online Assist Self-employed (includes help from tax experts): $194.99 federal, $44.99 per state

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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