Written by TaxHakr | Part of our Transparency Series

Let’s Be Honest: Taxes Can Feel Like Alphabet Soup

If you’re a freelancer, creator, or side hustler, chances are you’ve seen the phrase “1099” tossed around like it’s common sense. 1099-NEC. 1099-K. 1099-MISC. For most people, these forms sound more like robot names than tax documents.

The truth? The IRS didn’t design tax forms with real humans in mind. But that’s why we started TaxHakr – to cut through the jargon, ditch the intimidation, and hand you straight talk that actually makes sense.

In this post – part of our Transparency Series – we’re going to break down the difference between 1099-NEC vs. 1099-K. We’ll explain who gets which form, what they report, and how it affects your taxes. By the end, you’ll be able to confidently say, “Oh yeah, I get it. No big deal.”

So let’s dive in.

Quick Answer: 1099-NEC vs. 1099-K

Before we unpack all the details, here’s the 30-second version:

• 1099-NEC: Reports nonemployee compensation – basically money businesses pay you directly for work (like freelancing, consulting, or gigs).
• 1099-K: Reports payment transactions processed through platforms (like PayPal, Venmo, Etsy, or Uber).

Think of it this way:

• Did you get paid directly by a client or business? → That’s a 1099-NEC.
• Did you get paid through an app or platform that processes transactions? → That’s a 1099-K.
  
  Easy enough, right? Now let’s break it down.
  

What is a 1099-NEC?

The 1099-NEC stands for “Nonemployee Compensation.” Translation: you’re not an employee, but you got paid.

• Who sends it? Businesses or clients that paid you $600 or more in a year for services.
• Who gets it? Freelancers, independent contractors, consultants, creators, mechanics, dog walkers – anyone paid outside a traditional payroll system.
• What it reports: How much a business paid you for your work (before expenses).

Example:

You’re a graphic designer. You design a logo for a small business, they pay you $1,200 via check or direct deposit. Boom – you’ll get a 1099-NEC from that business.

What is a 1099-K?

The 1099-K reports third-party payment transactions. That’s IRS-speak for: money processed by apps, payment processors, and platforms.

• Who sends it? Companies like PayPal, Stripe, Etsy, Uber, DoorDash, Venmo (business accounts), and similar platforms.
• Who gets it? Sellers, gig workers, or freelancers who receive payments through those platforms.
• What it reports: The gross amount of money processed on your behalf. (Gross = before fees are taken out.)

Example:

You sell handmade candles on Etsy. Customers pay through Etsy, and Etsy pays you after taking their cut. Etsy will send you a 1099-K showing the total sales processed, not your profit.

The Thresholds: When Do You Actually Get These Forms?

Here’s where things get a little tricky – and why people get confused.

1099-NEC Threshold:

• If you earn $600 or more from a single client, they have to send you a 1099-NEC.

1099-K Threshold:

This one has been in the headlines a lot. Originally, platforms only sent a 1099-K if you had:

• $20,000+ in payments and 200+ transactions.

But starting in 2024 for the 2025 tax season, the IRS is rolling out new rules:

• Platforms must issue a 1099-K if you earn $5,000 or more (it was supposed to drop to $600, but the IRS delayed it).

Translation: expect to see more 1099-Ks in your mailbox in the coming years if you’re selling online or using payment apps for business.

Common Misconceptions

Let’s clear up some of the most common myths we hear at TaxHakr:

1. “If I don’t get a 1099, I don’t have to pay taxes.”
   ❌ Wrong. You’re required to report all income, even if no form shows up.
2. “A 1099-K means I made that much profit.”
   ❌ Nope. It’s just gross payments. You still deduct fees, supplies, mileage, etc. That’s where TaxHakr’s Rebel Brain™ helps.
3. “I’ll get double-taxed if I get both forms.”
   ❌ Not if you report correctly. You only pay tax on actual income once. The key is good record-keeping.
4. “Venmo and PayPal don’t count if it’s under $600.”
   ❌ You still need to report it. The $600 rule is about whether a form gets sent, not whether income is taxable.

Real-World Scenarios: NEC vs. K

Let’s play this out with real examples.

Scenario 1: Freelance Photographer

• A local boutique pays you $1,000 for a photo shoot → 1099-NEC
• You also sell stock photos on Shutterstock → 1099-K

Scenario 2: Rideshare + Side Hustle

• Uber pays you through their platform → 1099-K
• A private client pays you $700 to drive them regularly → 1099-NEC

Scenario 3: Online Seller

• You sell $7,000 worth of crafts on Etsy → 1099-K
• You take on a custom commission directly for $800 → 1099-NEC

See the pattern? It’s not either/or – it’s both/and depending on the source.

How These Forms Affect Your Taxes

Here’s the part the IRS doesn’t explain clearly:

• 1099-NEC income goes directly onto Schedule C (your self-employment form).
• 1099-K income also goes onto Schedule C.

In other words: the IRS doesn’t care which form you get. It all flows into your business income. What matters is that you track your expenses, so you’re not taxed on gross numbers.

That’s where most people overpay – because they forget to deduct mileage, supplies, subscriptions, or even their home office. TaxHakr exists to make sure that doesn’t happen.

TaxHakr Transparency Tip

If you earn side-hustle or freelance income, keep in mind:

• 1099-NEC = direct client work
• 1099-K = platform/app work

But the IRS expects you to add both up. At the end of the day, you’re reporting all income, forms or no forms.

This is exactly why we built TaxHakr—to track your deductions in real time, flag risks, and make sure you don’t pay more than you owe.

Frequently Asked Questions

Q: Can I get both a 1099-NEC and a 1099-K in the same year?
A: Absolutely. Many freelancers and creators get multiple forms from different income streams.

Q: What if I get paid in cash?
A: You won’t get a form, but the IRS still expects you to report it. Keep track!

Q: Do I need to attach these forms to my tax return?
A: Nope. Just keep them in your records and report the income correctly.

Q: What if my client uses PayPal to pay me? Will I get a 1099-NEC or 1099-K?
A: If they pay you as a “business transaction,” PayPal will likely issue a 1099-K. If they pay you as “friends & family” or directly by check, the client issues a 1099-NEC.

Final Word: Don’t Fear the 1099s

At the end of the day, 1099-NEC vs. 1099-K isn’t about complexity – it’s about clarity. They’re just different reporting tools for the same goal: tracking your income.

The scary part is that most people don’t know how to line them up on their taxes. That’s where overpaying, mistakes, and IRS letters happen.

TaxHakr exists to flip the script. We built our platform so you can connect your accounts, track deductions, and see exactly how your 1099s fit into the big picture – without the stress.

So the next time you hear someone groan about “1099s,” you can smile and say: “It’s actually not that bad. I’ve got it covered thanks to TaxHakr.”

About the Transparency Series

This blog is part of TaxHakr’s Transparency Series – our commitment to breaking down the tax code into plain English. No jargon, no scare tactics – just the truth, served straight.

Because knowledge is power. And when it comes to taxes, the more you know, the less you overpay.