Not all payouts are the same. Form 1099-K reports gross payments processed by card processors and third-party networks (think merchant acquirers, marketplaces, and payment apps). Whereas, Form 1099-INT reports interest income paid to an individual (bank accounts, CDs, escrow, or late-payment interest to a customer or vendor). Mixing these two IRS forms can trigger rejections and possibly avoidable penalties.
This guide on 1099-K vs 1099-INT explains what belongs on each form, the current 2025 (TY) rules and thresholds, and exactly how to e-file both forms.
Understanding and Applying Form 1099-K
Form 1099-K sits at the heart of today’s app-driven economy. Payment-app reporting and card payment reporting through this form is how the IRS keeps track of payments that flow through digital networks, everything from an Etsy shop’s holiday sales to a rideshare driver’s weekly payouts. In essence, it reports gross payments made in payment settlement entities, merchant acquiring entities (for card transactions), and third-party settlement organizations (for third-party network transactions).
When to Use 1099-K
Form 1099-K threshold has changed several times. The threshold was $5,000 for 2024 and later revised to $2,500 for 2025. However, the One Big Beautiful Bill made changes to this threshold. For 2025 tax year (to be filed in 2026), 1099-K must be filed only if the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.
Note that payment card transactions are reported by merchant acquiring entities, and third-party network transactions are reported by TPSOs. Both types fall under reporting obligations for settlement of payment transactions, but the rules and thresholds differ depending on whether the transaction was made via card or via a third-party network
Not every transfer qualifies:
- Personal or “friends and family” payments are excluded if they don’t represent sales or services.
- Sales already settled by merchant acquirers are handled in the card stream. There is no need for a duplicate TPSO form.
What Is Form 1099-INT & How and When to File It?
If Form 1099-K tracks money in motion, Form 1099-INT records what money earns while it waits. It’s the IRS’s primary interest income form, used by banks, lenders, escrow agents, and even businesses that charge late-payment interest.
This form becomes necessary under three main conditions, including the 1099-INT $10 rule that applies to most interest payments:
- $10 rule: File when at least $10 in taxable interest in Boxes 1, 3, or 8 is paid to an individual, partnership, or trust.
- $600 business rule: File when a payer, in the course of trade or business, pays $600 or more in interest payments.
- Withholding trigger: File any time federal or foreign tax has been withheld, regardless of amount.
Beyond banks, 1099-INT can also apply to escrow accounts, peer-to-peer lending platforms, and corporate treasuries that earn taxable interest. You might not see your business as a financial institution, the IRS might, so automate.
Track interest monthly, flag exempt corporate accounts early, and store digital statements. Do this to cut corrections later and reduce 1099 penalties in 2026.
1099-K vs 1099-INT: At a Glance
| Category | Form 1099-K | Form 1099-INT |
|---|---|---|
| What it captures | Tracks how much money moves through payment apps or marketplaces — the gross amount of reportable payment transactions for goods or services (not net payouts) | Tracks interest income paid or credited on accounts and other obligations by banks or businesses (including tax-exempt interest) |
| 2025 reporting threshold | Required only when total gross payments for goods or services surpass $20,000 and cross 200 transactions for the year (TPSOs); payment card transactions have no de minimis threshold; any amount must be reported if backup withholding was applied. | Required when $10 or more of amounts reportable in boxes 1, 3, or 8 is credited (for example, interest income or tax-exempt interest); or when $600 or more of interest is paid in the course of a trade or business; and required regardless of amount if U.S. federal income tax (backup withholding) or foreign tax was withheld. |
| Who usually files | Payment networks and digital platforms such as PayPal, Stripe, Uber Eats, DoorDash, or Etsy | Banks, credit unions, lenders, escrow services, and companies that pay interest |
| Who receives it | Gig workers, sellers, freelancers, and creators whose payments pass through these platforms | Individuals, partnerships, trusts, or estates that earned interest income; payments to corporations are generally exempt recipients (unless tax was withheld) |
| Filing method | Must be e-filed if the payer issues 10 or more total information returns | The same e-file rule applies. |
Why Choosing the Correct Form Matters
Misclassification is common. For instance, a $1,900 crowdfunding payment for medical bills, with no goods or services exchanged, is generally not reportable on Form 1099-K. By contrast, interest you pay in the course of your trade or business (e.g., $750) is reportable on Form 1099-INT, except when paid to an exempt recipient such as a corporation. Mix these up and you trigger IRS matching notices, recipient disputes, and escalating penalties.
1099 penalties (For forms to be filed in 2026):
- $60 per form if correctly filed within 30 days after the due date
- $130 per form if filed between 31 days after the due date and August 1, 2026
- $340 per form if filed after August 1, 2026
- At least $680 per form for intentional disregard (no maximum penalty)
How Payers Can Stay Ahead
- Validate TINs early: Collect W-9s and run IRS TIN Match before year-end. Finding a mismatch in November or December is easier to fix than finding a mistake in February.
- Separate personal from business transfers: For platforms/TPSOs, tag “friends & family” correctly so non-sales transfers aren’t reported. For businesses, avoid routing personal reimbursements through merchant accounts.
- Aggregate small totals: Add up all interest paid to each recipient for the calendar year across accounts. If the total is $10 or more, you’ll need to file Form 1099-INT. (For example, twelve $1 monthly credits equal $12, which is above the $10 threshold. If any U.S. federal income tax (backup withholding) or foreign tax was withheld, file regardless of the amount.
- Centralize data: Roll up everything you paid to the same person (same name/TIN) under your EIN before checking thresholds.
- Keep streams separate: Card-acquirer totals and TPSO totals are not combined. Each party reports its own 1099-K stream, so no cross-adding and no duplicates.
Platforms such as 1099Online simplify this process. Payers can upload data once, run instant TIN-matches, and file both forms in minutes.
Forms 1099-K & 1099-INT Deadlines at a Glance
Both forms follow the deadlines:
- Recipient copies: Monday, February 2, 2026 (Because January 31, 2026, falls on a Saturday)
- IRS e-file deadline: March 31, 2026
Real-Life Scenarios
Scenario 1: A marketplace pays a seller $3,200
Correct Payer Action: No Form 1099-K unless total gross payments exceed $20,000 and there are more than 200 transactions for the year (or backup withholding/state rules apply).
Scenario 2: A bank posts $12 interest
Correct Payer Action: File 1099-INT as the payment meets the $10 threshold.
Scenario 3: A business deposits $750 as late-payment interest
Correct Payer Action: File 1099-INT ($600 business threshold).
Scenario 4: A crowdfunding page raises $1,900 with no perks
Correct Payer Action: No form (personal gift).
Scenario 5: An app withholds 24% on $200
Correct Payer Action: File 1099-K (any amount with withholding).
FAQs
1. Is the $600 1099-K rule active in 2025?
No. Under the OBBB, TPSOs must report only if payments exceed $20,000 and there are more than 200 transactions; the $600 threshold does not apply for 2025 or 2026 unless future law changes.
2. Should a bank file 1099-K for Zelle transfers?
No. Zelle is a bank-to-bank network, not a third-party processor, so those transfers aren’t reportable on 1099-K.
3. Are corporations exempt from 1099-INT?
Yes, unless federal or foreign tax was withheld. Always confirm entity type using the recipient’s W-9.
4. Can the payer send both forms to the same recipient?
Yes. If a recipient earned both platform payments and interest income, each form should be filed separately.
5. When must the payer e-file?
Any payer issuing 10 or more total information returns in a year must e-file.
6. May the payer file 1099-K below the federal threshold?
Yes. A TPSO may choose to issue (furnish) a Form 1099-K even when not required by the threshold. If backup withholding was performed, the TPSO must file Form 1099-K with the IRS (and Form 945) regardless of the amount.
Accuracy in reporting matters greatly for compliance. For payers, precision and timely filing build trust and prevent costly mistakes. Use 1099-K for sales run through cards or platforms, and use 1099-INT for interest you pay. Pick the right form and file on time to avoid rejections, headaches, and penalties.
Start now with 1099Online upload your data and e-file in minutes.