Form 1099-K for marketplaces: the 2026 threshold, and who files on Stripe Connect
Your marketplace pays US sellers: do you owe them and the IRS a Form 1099-K, or does Stripe? The threshold in force for 2025 and 2026 payments, who files, the deadlines, tax ID collection and the penalties, from the IRS and Stripe's own pages.
Kreezalid10 min read
In short: a marketplace that settles payments between buyers and US sellers is, for the IRS, a third party settlement organization. It must file a Form 1099-K for every seller who received over $20,000 in more than 200 transactions during the calendar year, send the seller a copy by 31 January, and file with the IRS by 31 March when filing electronically. That threshold applies to payments made in 2025 and in 2026. On Stripe Connect, the filer is Stripe or your company, depending on who controls pricing. A missing form costs $60 to $340, and a missing seller copy the same again.
This guide is for people who run or plan a marketplace with sellers in the United States. Everything below comes from IRS pages and from Stripe’s documentation, read on 12 November 2026, with links. It is information, not tax advice: US information reporting has many special cases, so check yours with a US accountant.
The threshold in force: over $20,000 and over 200 transactions
The IRS fact sheet FS-2025-08 of October 2025 states the current rule:
“The One, Big, Beautiful Bill (OBBB) retroactively reinstated the reporting threshold in effect prior to the passage of the American Rescue Plan Act of 2021 (ARPA) so that a third party settlement organization (TPSO) is not required to file a Form 1099-K unless the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.”
Both conditions must be met, per seller, per calendar year. The IRS page Understanding your Form 1099-K, reviewed on 28 October 2026, says the same.
The history, in three lines, because many articles still quote old figures:
- Before 2021: over $20,000 and over 200 transactions.
- The American Rescue Plan Act of 2021 lowered it to more than $600, whatever the number of transactions. Three IRS notices (2023-10, 2023-74 and 2024-85) then gave transition periods and penalty relief.
- The One, Big, Beautiful Bill brought the old threshold back, retroactively. It is the rule for 2025 payments (forms sent in early 2026) and 2026 payments (forms due in early 2027).
Two limits to that relief. A platform may still send a form below the threshold. And some states set their own, lower thresholds (see below).
Am I concerned?
Is your marketplace a third party settlement organization?
The IRS defines a TPSO as “the central organization that has the contractual obligation to make payments to participating payees” of third party network transactions. The fact sheet lists the marks of such a network: a central organization with which a substantial number of unrelated sellers have accounts, an agreement to settle transactions between those sellers and their buyers, standards for doing so, and a guarantee of payment. Its own example:
“An example of a TPSO is an online auction payment facilitator like an online marketplace, which operates as an intermediary between buyer and seller by transferring funds from the buyer to the seller for the provision of goods or services”
A marketplace that only publishes listings and never touches the money does not match that description. One that collects the buyer’s payment and pays the seller out does.
What if the company is not American?
The fact sheet answers in one line: “A PSE may be a domestic or foreign entity.” The instructions for Form 1099-K then give non-US payers an exception: no form is required for a payee who has no US address, as long as the payer does not know or have reason to know that the payee is a US person. A foreign marketplace is therefore concerned for its US sellers, not for the others.
What if my marketplace runs on someone else’s software?
The duty follows the money, not the code. The instructions put it on whoever “submits the instruction to transfer funds to the account of the participating payee”. A software vendor that hosts your marketplace but is not party to the payment arrangement with your sellers does not fit the TPSO definition quoted above. The question to settle is the one in the next section: between your company and your payment provider, who files.
That is our reading of the IRS texts, not a statement by the IRS about marketplace software. If your vendor is itself the Stripe Connect platform your sellers are attached to, the answer may differ: ask.
Who files on Stripe Connect: Stripe or the platform?
Stripe’s documentation on US tax reporting for Connect platforms draws the line:
“Stripe issues 1099-K forms for connected accounts where Stripe controls the pricing or for transactions where the connected account pays fees directly to Stripe. For all other transactions where the platform controls the pricing, the platform is responsible for filing any relevant 1099 forms.”
In API terms, Stripe issues the form when the account’s controller.fees.payer is account. It does not when that value is application, application_express or application_custom.
Read against Stripe’s three historical account types, this gives the following. It is a reading, to confirm on your own accounts:
| Connected account | Charges it supports, per Stripe | Who files the 1099-K, on our reading |
|---|---|---|
| Standard | Direct charges only: the seller has its own relationship with Stripe | Stripe |
| Express | Destination charges, separate charges and transfers, or direct charges | Your company, when you control pricing |
| Custom | Destination charges, separate charges and transfers, or direct charges | Your company, when you control pricing |
Stripe itself now recommends reasoning with the controller properties and not with account types, and notes that direct charges on Express or Custom accounts bill the connected account “rather than billing the platform”. So look at the property on your accounts, not at the label.
When the platform is the filer, Stripe sells a 1099 tax reporting product to “create, modify, file, and deliver tax forms” for connected accounts. Using it, or any other filing agent, does not move the liability. The IRS fact sheet: the entity responsible for filing “is liable for any applicable penalties under IRC 6721 and IRC 6722 if the reporting requirements are not met”.
For how the Connect account types compare with other providers, see our marketplace payment solutions guide.
1099-NEC and 1099-MISC: not for payments that go on a 1099-K
A service marketplace may think it owes its freelancers a Form 1099-NEC. For payments settled by card or through a third party network, the IRS says no:
“If a transaction is reportable under both IRC 6041 […] or IRC 6041A(a) […] and under IRC 6050W […] the transaction should only be reported on Form 1099-K.”
Forms 1099-NEC and 1099-MISC remain for payments you make outside that channel, such as a bonus wired from your own bank account. For payments made after 31 December 2025, their threshold is $2,000 per recipient. Form 1099-NEC is due on 31 January, to the recipient and to the IRS alike.
The calendar of a year
For payments made in 2026:
| When | What |
|---|---|
| At seller sign-up | Collect the tax ID (Form W-9, or a W-8 form for foreign sellers) |
| Through 2026 | Track gross payments and the number of transactions per seller |
| 31 January 2027 | Give each reportable seller their copy of Form 1099-K |
| 28 February 2027 | File with the IRS, if filing on paper |
| 31 March 2027 | File with the IRS, if filing electronically |
Anyone who files 10 or more information returns in the year must file electronically. A date that falls on a weekend or holiday moves to the next business day: 31 January 2027 is a Sunday, and Stripe’s own calendar for this season gives 1 February as the deadline for seller copies.
What to collect from sellers
A taxpayer identification number. A Social Security number, an employer identification number or an individual taxpayer identification number, usually on Form W-9. The IRS runs a TIN Matching Program so filers can check a number before filing.
Or proof of foreign status. A W-8 form or the documentary evidence the instructions describe, for sellers treated as foreign persons.
If the seller gives nothing: backup withholding. The instructions: “A payment made by a TPSO is a reportable payment potentially subject to section 3406 backup withholding.” The rate is 24 percent, taken from the seller’s payments. And a platform that withheld must file a Form 945 and a 1099-K for that seller whatever the amounts.
The practical lesson is the same everywhere: ask for the tax ID in your seller onboarding, before the first payout, when the seller still wants something from you.
What the seller receives
A copy of the form, by 31 January, on paper or electronically if the seller agreed to electronic delivery. You may not charge for it: the IRS says filers “are precluded from collecting fees for costs incurred in fulfilling these requirements”.
The figure that surprises sellers is box 1a. It is the gross amount: it “doesn’t include adjustments for fees, credits, refunds, shipping, cash equivalents or discounts”. Your commission is not deducted. Sellers deduct it themselves on their return.
A page to point your sellers to
The IRS page Understanding your Form 1099-K is written for recipients. Its key reminder: “Whether or not you receive a Form 1099-K, you must still report any income on your tax return.”
State thresholds
Some states require a 1099-K below the federal threshold. We did not read each state’s rules. Stripe’s state requirements table for 1099-K, read on 12 November 2026, gives these filing thresholds, and warns that requirements “remain subject to change for the 2026 tax season”:
| Threshold in Stripe’s table | States |
|---|---|
| $600 | District of Columbia, Maryland, Massachusetts, Montana, Vermont, Virginia |
| $1,000 | New Jersey |
| $1,000 and 4 transactions | Illinois |
| $2,500 | Arkansas |
Treat this as a provider’s summary and confirm with the state concerned.
Penalties
The IRS charges per form, once for the return not filed and once for the seller statement not provided:
| Delay | Returns due in 2026 | Returns due in 2027 |
|---|---|---|
| Up to 30 days late | $60 | $60 |
| 31 days late through 1 August | $130 | $130 |
| After 1 August or not filed | $340 | $340 |
| Intentional disregard | $680 | $690 |
Annual caps apply, except for intentional disregard, which has none.
One last boundary: collecting and remitting sales tax as a “marketplace facilitator” is a separate, state-level obligation that this article does not cover.
Frequently asked questions
What is the 1099-K threshold for 2026?
For payments made in 2026, a marketplace or payment app must file a Form 1099-K for a seller who received over $20,000 in more than 200 transactions. The same threshold applies to 2025 payments. Some states use lower thresholds.
Who files the 1099-K when a marketplace uses Stripe Connect?
According to Stripe’s documentation, Stripe files where it controls pricing or the connected account pays its fees directly to Stripe, which is the usual case for Standard accounts. Where the platform controls pricing, as is usual with Express and Custom accounts, the platform must file.
Does a marketplace also need to send a 1099-NEC to its sellers?
Not for payments made by card or through a third party network: the IRS says these are reported only on Form 1099-K. Form 1099-NEC is for payments made outside that channel, from $2,000 per recipient for payments made after 31 December 2025.
Does a foreign marketplace have to file 1099-K forms?
It can. The IRS says a payment settlement entity may be domestic or foreign. A non-US payer does not have to file for a seller with no US address, unless it knows or has reason to know the seller is a US person.
What happens if a seller does not give a tax ID?
Payments to that seller become subject to backup withholding at 24 percent. The platform that withholds must then file a Form 945 and a 1099-K for that seller, whatever the amounts.
The same question in other countries
- United Kingdom: HMRC’s reporting rules for digital platforms.
- Canada: Part XX reporting rules for digital platform operators.
- Australia: the Sharing Economy Reporting Regime.
If your sellers are freelancers and not merchants, our guide to building a service marketplace covers the rest of the model.
What Kreezalid prepares for you
On the Grow and Extend plans, your back office has a page called Seller statements, under Sales. It adds up what each seller was paid over a calendar year, quarter by quarter: number of sales, net amount paid, and the fees and commissions you withheld. Each currency has its own table, and nothing is converted.
- For you: the list of every seller paid in the year, with a CSV export to check, or to hand to your accountant.
- For each seller: their own statement in their seller space, ready to print or save as a PDF.
- A hint, not a ruling: sellers under 30 sales of goods and €2,000 are flagged, from your marketplace’s figures alone.
This is not a Form 1099-K, and the quarters do not match the form’s monthly boxes. Use it to see which sellers come near the $20,000 and 200 transactions threshold, and to answer a seller who asks what you paid them.
What it does not do yet: it does not e-mail the statements, it does not collect tax identification numbers or tax residence from your sellers, and it does not produce the file for the tax authority. Those are the next steps on our roadmap. You remain the operator: Kreezalid computes the figures and files nothing on your behalf.
See what each plan includes on the pricing page.
Sources
All read on 12 November 2026.
- IRS, FS-2025-08, Form 1099-K frequently asked questions, October 2025: threshold, TPSO definition, deadlines, electronic filing, payee statements, backup withholding, foreign entities.
- IRS, Understanding your Form 1099-K, reviewed 28 October 2026.
- IRS, Instructions for Form 1099-K: who must file, foreign payees, gross amount, backup withholding.
- IRS, Instructions for Forms 1099-MISC and 1099-NEC: $2,000 threshold, 31 January deadline.
- IRS, Backup withholding, reviewed 10 October 2026, and Information return penalties, reviewed 30 October 2026.
- Stripe, US tax reporting for Connect platforms, Connected account types, Get started with tax reporting and 1099-K form state requirements.