What you actually owe on a 1099-K

For US filers · updated 11 September 2026

A 1099-K reports what came in, not what you made. You are taxed on profit, and the gap between the two is your cost basis. The part of that basis you cannot prove is treated as zero — which is the expensive way to find out you should have kept the receipts.

First, the threshold — it changed, and not the way people expect

The One Big Beautiful Bill Act, law since 4 July 2025, repealed the $600 rule and restored the old threshold. A payment platform issues a 1099-K when you cross $20,000 and 200 transactions — both, not either.

This is the part that catches people out: the threshold decides whether a form is issued. It does not decide whether you owe tax. Business income is taxable whether or not anyone sends you paperwork about it. If you sold $14,000 of sneakers at a profit and received no 1099-K, you still have income to report.

And if you are moving twenty pairs a month, you are not near the line anyway — you clear $20,000 and 200 transactions comfortably, and the form is coming.

The calculator

Nothing here is sent anywhere. It runs in your browser and stores nothing.

Gross payments on your 1099-K Box 1a. The big number, before any fees came out.

What you paid for the items that sold Cost of goods sold. Stock still on the shelf does not belong here.

Marketplace and payment fees Commission plus processing. Usually far more than the advertised rate.

Shipping you paid Outbound postage and packaging you absorbed.

Other business expenses Supplies, software, subscriptions, mileage, home office.

What this deliberately does not tell you: your income tax. That depends on your filing status, your other income, your deductions and your state — none of which this page knows, and guessing at it would produce a confident number that happens to be wrong. Self-employment tax is computable from your profit alone, so that is the one that appears above. Income tax sits on top of it.

How the self-employment figure is worked out

Taxable base	92.35% of net profit — the portion subject to SE tax.
Social Security	12.4%, applied up to the 2026 wage base of $184,500. Profit above that is not charged this part.
Medicare	2.9%, with no ceiling.
Not modelled	The additional 0.9% Medicare surcharge on high earners, the deduction for one half of SE tax, and the qualified business income deduction — all of which can move the final number.

The part that costs people money

Basis you cannot substantiate is basis of zero. If a return is examined and you cannot show what you paid for the pairs you sold, the cost side of the calculation does not default to something reasonable — it defaults to nothing, and the gross becomes the profit. On $80,000 of sales that is the difference between tax on a few thousand dollars and tax on eighty.

Substantiation is not a spreadsheet cell containing a number you typed. It is the receipt, the date, the merchant and the amount, retained and retrievable — which is easy in January and nearly impossible to reconstruct two years later when someone asks.

This is the problem Colourway exists to solve.

It reads a photograph of a receipt into a per-item cost basis — landed cost with shipping and duties allocated across the pairs that incurred them, realized profit per pair, and a year-end pack with the Schedule C lines already labelled. The receipt image stays attached to the figures it produced.

Watch what it does when it is not certain. Shipping and duties that aren't printed come back marked Unsure — not zero. That distinction is the whole difference between a basis you can defend and one you cannot.

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This is not tax advice. It is arithmetic, plus the two rules that catch resellers out most often. Whether your activity is a business or a hobby, which form applies to you, and what your bracket is are questions for an accountant who knows your situation. Canadian filers: none of the above applies — there is no 1099-K, and the CRA's treatment of inventory and business income is its own analysis.