The short answer: when Shopify sends a 1099-K
A 1099-K is an information return your payment processor files with the IRS and mails to you. It reports the gross dollars that flowed through your account — not your profit, and not a bill.
For the 2025 and 2026 tax years, the IRS requires a processor to issue a 1099-K only when your gross payments exceed $20,000 and your transaction count exceeds 200, and both conditions must be met, according to the IRS. The much-publicized $600 rule, and the interim $5,000 phase-in, no longer apply.
So if you ran $30,000 through Shopify Payments across 180 orders, you are over the dollar limit but under the transaction count — and Shopify does not have to send a form. If you ran 400 orders totaling $12,000, you cleared the count but not the dollars, so again, no form.
Why the number moved
The reason the threshold keeps changing is legislation. The One Big Beautiful Bill reverted the 1099-K trigger back to the long-standing $20,000-and-200 level after years of lower proposed thresholds, per the IRS FAQ on the change. That is why a guide written in 2023 will tell you something different from one written today.
This is general information, not tax advice. Rules change and vary by situation — consult a licensed CPA or tax professional before acting.
Which payments count toward your threshold
Only payments processed through Shopify Payments count toward the 1099-K that Shopify issues. That is the built-in checkout that deposits settlements straight to your bank.
Here is the part most guides skip: the form reports your gross processing volume — the full order value before Shopify nets out fees and refunds. So the number on your 1099-K will be higher than the cash Shopify actually deposited. Understanding that gap starts with knowing that a payout is not the same as revenue, a distinction we walk through in our ecommerce P&L guide.
If you want the exact timing and steps for retrieving the document once it is ready, see our companion piece on when your Shopify 1099-K will be available.
What if you use PayPal, Stripe, or another gateway?
Shopify only reports what it processes. If you accept payments through a separate processor — PayPal, Stripe, or another external gateway — that company evaluates its own volume against the same federal thresholds and issues its own 1099-K if you qualify.
That means a single store can receive two or three separate 1099-Ks, one per processor, each covering a slice of your sales. None of them shows your whole business, and none shows your profit. Your job at tax time is to reconcile every form back to your own books so nothing is double-counted and nothing is missed.
One more wrinkle from using an outside gateway: Shopify charges an extra transaction fee on top of that processor's fee when you don't use Shopify Payments. That fee is real money leaving your margin, which is another reason to know exactly where every dollar goes.
Where to find your Shopify 1099-K
If you cross the thresholds, Shopify emails the store owner when the form is ready, typically early in the year. You can also retrieve it inside your admin under Finances → Documents.
If you did not cross the thresholds, there is simply no form to download — and that is normal. The absence of a 1099-K is not a signal that your income is untaxed.
The trap: no 1099-K does not mean no tax
This is the single most expensive misunderstanding for new sellers, so read it twice: you owe income tax on your profit whether or not a 1099-K is issued.
The threshold governs reporting, not taxability. A store that made $9,000 in profit across 150 orders gets no form and still owes tax on that $9,000. The IRS expects you to report business income from your own records regardless of what paperwork lands in your mailbox.
And when you do get a form, the opposite trap appears: the gross figure on the 1099-K is not your taxable income. Your taxable income is your net profit after fees, refunds, product cost, and expenses — a much smaller number.
A worked example: gross form vs. what you actually owe
Say your store processed $28,000 across 240 orders through Shopify Payments. You cross both thresholds, so a 1099-K arrives reporting $28,000. That is not what you're taxed on. Walk it down:
- Refunds issued: 12 orders at ~$45 each = $28,000 − $540 = $27,460 net sales
- Payment processing: the roughly 2.9% + 30¢-per-transaction online card fee documented in this Shopify fee breakdown works out to about $796 + $72 = −$868
- Product cost (COGS): 228 net units at ~$12 each = −$2,736
- Ad spend: −$9,000
- Apps, subscriptions, and tools: −$1,400
Net profit ≈ $27,460 − $868 − $2,736 − $9,000 − $1,400 = $13,456. You're taxed on roughly $13,456, not the $28,000 printed on the form. The gap between the two is nearly $14,500 — and if your books can't prove it, you can't defend it.
Two other costs quietly hit this same picture. A refunded order usually does not return the original processing fee to you, and a customer chargeback carries a $15 dispute fee in the US on Shopify Payments, as this fee guide notes. Small leaks, but they belong in the books too.
State thresholds can be lower than federal
The $20,000-and-200 rule is the federal floor. Several states set their own, lower 1099-K thresholds, so you might receive a form from a low-threshold state even if you never cross the federal bar. Always check your own state's Department of Revenue rather than assuming the federal number is the only one that applies.
While you are thinking state-by-state, remember that sales tax follows a completely separate rulebook driven by economic nexus, which our Shopify sales tax and economic nexus guide breaks down. A 1099-K and a sales tax obligation are unrelated events.
From a gross form to real profit
The whole 1099-K headache exists because the form only knows one number — gross dollars through one processor — while the number that actually matters is per-order profit. The sooner you can see the second number, the less the first one scares you.
That is what PodVector is built for. It connects your Shopify, Meta Ads, Google Ads, Printify, and Printful accounts and computes your true per-order profit — sale price minus product cost, processing fees, shipping, and the ad spend that won the order. PodVector is not a dashboard you have to read; Victor, its AI operator, analyzes your live data and, with your approval, takes action on the Shopify side to protect margin. Victor reads your ad data to explain what's working, but he does not touch your ad account.
When your books already reconcile every payout to gross sales, fees, and refunds, tax season stops being a scramble. Automating that reconciliation is the whole point of ecommerce bookkeeping automation — and clean books are also what let you attack the real risk in the numbers above: acquisition cost. If ad spend is eating your gross profit, our guide on how to improve contribution margin shows where to pull the levers.
FAQs
Will Shopify send me a 1099 if I made under $20,000?
No. For the 2025 and 2026 tax years, Shopify issues a 1099-K only when your Shopify Payments volume exceeds both $20,000 in gross payments and 200 transactions, according to the IRS. Fall short of either one and no form is generated. You still report the income on your return.
Is the amount on my 1099-K what I pay tax on?
No. The 1099-K shows gross payment volume before fees, refunds, product cost, and expenses. Your taxable income is your net profit, which is usually far lower. Keeping reconciled books is how you prove the difference.
Do I owe tax if I never receive a 1099-K?
Yes. Income tax applies to your business profit regardless of whether any form is issued. The threshold decides who gets paperwork, not who owes tax. When in doubt, report the income from your own records.
What if I use both Shopify Payments and PayPal?
Each processor evaluates its own volume against the thresholds separately. You could receive one form from Shopify and another from PayPal, each covering only the sales it handled. Reconcile every form to your books so you don't double-count revenue.
Where do I download my Shopify 1099-K?
If you qualified, Shopify emails the store owner and posts the form in your admin under Finances, then Documents. If nothing appears, you most likely did not cross the reporting thresholds this year — which does not change your obligation to report income.
Does getting a 1099-K mean I did something wrong?
No. A 1099-K is a routine information return that simply reflects your processing volume crossed the threshold. It is not an audit, a penalty, or a bill. Treat it as one input to reconcile against your own profit records.
This is general information, not tax advice. Rules change and vary by situation — consult a licensed CPA or tax professional before acting.