The 1099-K Just Changed: The New $20,000 Threshold and What It Means for Foreign-Owned US LLCs

Many foreign-owned US LLCs spend the year worrying about a single piece of paper: the Form 1099-K. Then, in 2025, the rules changed again. A law signed in July 2025 rolled the reporting threshold all the way back to where it sat years ago, undoing a planned drop toward $600. If you sell through a US marketplace or take card payments, here is what actually changed, what the new number is, and why many non-resident owners should not receive a 1099-K at all.

What a Form 1099-K Actually Is

A Form 1099-K is an information return. A "payment settlement entity" — think Stripe, PayPal, Amazon, Etsy, or a card processor — files it with the IRS and sends you a copy reporting the gross amount of payments you received for goods and services through that platform. It is not a tax bill, and it is not a calculation of your profit. It simply tells the IRS that money flowed to your account.

What Changed in 2025

For years the threshold was high: a platform only had to issue a 1099-K if you received more than $20,000 and had more than 200 transactions in a year. The American Rescue Plan Act of 2021 set out to lower that dramatically — eventually to just $600 — and the IRS had been phasing it in, with $5,000 for 2024, $2,500 for 2025, and $600 from 2026.

The One, Big, Beautiful Bill, signed on 4 July 2025, undid that. According to the IRS (IR-2025-107, 23 October 2025), the law "retroactively reinstated the reporting threshold in effect prior to the passage of the American Rescue Plan Act of 2021," so payment settlement entities are not required to file a 1099-K unless the gross amount of payments exceeds $20,000 and the number of transactions exceeds 200.

The Number That Matters Now

Both tests must be met: more than $20,000 in gross payments and more than 200 separate transactions in the same calendar year. Fall below either one and the platform is not required to send you a federal 1099-K. Because the change is retroactive, it applies to 2025 payments, not just future years. One caveat: some US states set their own, lower thresholds, so a state-level form can still arrive even when the federal rule would not require one.

The Part Most Non-Residents Miss

Here is the detail that matters most if you are a non-resident owner: the 1099-K regime is built for US payees. A payment settlement entity is generally not required to file a Form 1099-K for a payee it has documented as foreign with a valid Form W-8 — such as a W-8BEN for an individual or a W-8BEN-E for an entity. Per the IRS instructions for the requesters of Form W-8, foreign persons who provide an applicable W-8 are exempt from Form 1099 reporting and from backup withholding.

In other words, if your platform holds a valid W-8 establishing your foreign status, the $20,000-and-200 threshold is often beside the point — you should not be receiving a 1099-K in the first place.

When a Foreign-Owned LLC Still Gets One

So why do some non-resident LLC owners still see a 1099-K? Usually because the platform has US taxpayer information on file rather than foreign documentation. A single-member US LLC owned by a non-resident is, by default, a "disregarded entity," and many owners give the processor the LLC's US EIN — sometimes on a Form W-9 — during onboarding. To the platform, that looks like a US payee, and a US payee gets a 1099-K once the threshold is met. Letting a W-8 lapse, since these forms generally expire after three years, can produce the same result.

A 1099-K Is Not a Tax Bill

Whether or not you receive a 1099-K, your actual US tax obligations do not change. Receiving the form does not create a tax, and not receiving it does not erase one. Your filing duties as a foreign-owned LLC — for example, Form 5472 together with a pro forma Form 1120 for a single-member entity, or a Form 1040-NR if you have US-source income that is taxable to you — are set by the law and your own facts, not by whether a platform issued an information return. The 1099-K only changes what the IRS sees on its side.

A Practical Checklist

Confirm what documentation each platform holds for you — a W-8 (treated as foreign) or a W-9 and EIN (treated as US). If you are a non-resident who should be documented as foreign, make sure a current, valid W-8 is on file and has not expired. Keep your bookkeeping based on your real income and expenses rather than on the 1099-K figure, which is a gross number that can include refunds and platform fees. And if a 1099-K arrives that you believe is wrong, do not ignore it — reconcile it against your records and, if needed, ask the platform to correct it.

Why This Matters

The headline — "$20,000 is back" — is the easy part. The more valuable insight for non-resident founders is that the form may not apply to you at all when your foreign status is properly documented, and that the form never replaces knowing your real filing obligations. Getting the paperwork right upstream is what keeps surprises out of your mailbox.

Have Questions About Your Own Situation?

Every business is different, and the right answer depends on where you live, how your LLC is taxed, and how each platform has documented you. If you would like to talk it through, the MP Partner experts team is happy to help — no pressure, no hard sell, just clear answers.

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