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📦 Side Hustle

1099-K Changes: The IRS Now Knows About Your Side Hustle

7 min read · Updated June 2026

Remember when you could sell a few things on eBay and nobody cared? Those days are over. Starting in 2026, if you receive $600 or more through any payment platform, they're telling the IRS about it. Whether you were ready or not.

⚠️ What changed (and why you should care)

Before 2026

$20,000 AND 200 transactions

Most sellers flew under the radar

2026 and beyond

$600 (no minimum transactions)

Basically everyone with a side hustle

Who Gets a 1099-K Now?

If you received $600+ through any of these, expect a 1099-K in your mailbox (and a copy sent to the IRS):

  • Payment apps — PayPal, Venmo, Cash App, Zelle (business)
  • Marketplaces — eBay, Etsy, Poshmark, Mercari, Depop
  • Gig platforms — Uber, Lyft, DoorDash, Instacart, Fiverr
  • Payment processors — Stripe, Square, Shopify Payments

That's... basically everyone who makes money online. If you sold vintage clothes on Poshmark, drove for Uber on weekends, or freelanced on Fiverr — the IRS knows.

The Tax Math (It's Worse Than You Think)

Side hustle income typically gets taxed at three levels. Not one, not two — three:

  1. Self-employment tax — 15.3% on net earnings (if you make $400+). This is Social Security + Medicare. Employees split this with their employer. You pay both halves.
  2. Federal income tax — 10-37% depending on your total income bracket
  3. State income tax — 0-13% depending on where you live

📊 Let's run the numbers on a typical side hustle

Side hustle income$8,000
Business expenses (supplies, fees)−$1,200
Net earnings$6,800
SE tax (15.3% × 92.35%)−$962
Federal tax (12% bracket)−$816
State tax (5% avg)−$340
Total estimated tax$2,118

That's 31% of your net earnings going to taxes. On $8K of income.

Pay Quarterly or Pay More Later

If you expect to owe $1,000+ in tax for the year, the IRS wants you to pay in quarterly installments. Skip them and you get hit with an underpayment penalty (typically 3-5% of what you should have paid).

The quarterly due dates are the same every year: April 15, June 15, September 15, January 15. Put them in your calendar. Seriously.

🧮 Don't guess — calculate

Our 1099-K Tax Estimator calculates your federal, SE, and state tax — then gives you the exact quarterly payment amounts with due dates.

The Bottom Line

  1. The $600 threshold means most side hustlers will get a 1099-K in 2026
  2. Set aside roughly 30% of your net earnings for taxes
  3. Make quarterly payments — the penalty for skipping them is real money
  4. Track every business expense. Each one reduces your taxable income.

Disclaimer: This guide is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for your specific situation.