Starting with the 2025 filing season, the IRIS platform accepts Forms 1042-S, 1099-DA, and 5498-QA for e-filing—and TaxZerone fully supports e-filing of these forms for Tax Year 2025, making compliance faster and easier.

Tax reporting rules for 2025 bring several important updates to the 1099 series Forms — and understanding them now helps you file accurately for the upcoming tax season. Whether you are a small business owner, gig worker, freelancer or retiree, knowing these changes now can help ensure that you file accurately and comply with IRS Requirements. 
 
In this complete guide, we breakdown the key changes to 1099 forms for the 2025 tax year, who are affected by these changes, and outline the actions you should take to stay compliant.

Table of Content

• What’s new in Tax Year 2025 for 1099 forms?
  • 1. Form 1099-MISC & Form 1099-NEC: Golden Parachute Payment Changes 
  • 2. Form 1099-DA: New Reporting for Digital Assets 
  • 3. Form 1099-R: New Code “Y” for QCDs 
  • 4. Form 1099-K: Threshold Reinstatement and Transition Period 
  • 5. Form 1099-Q: New Checkboxes & Reporting Rollovers 

What’s new in Tax Year 2025 for 1099 forms?

The IRS has made several important changes to the 1099 forms for Tax Year 2025 that will affect businesses, freelancers, brokers, and retirees. These changes make tax reporting simpler, help people understand their income better, and make it easier to follow IRS rules.

Let’s dive into each major update.  

1. Form 1099-MISC & Form 1099-NEC: Golden Parachute Payment Changes 

 Beginning with Tax Year 2025, the IRS has updated how excess golden parachute payments must be reported. These payments—large compensation packages given to executives upon termination or change in company control—were previously reported on Form 1099-MISC (typically in Box 13).  
 
What’s Changed: 
The golden parachute payment reporting on Form 1099-MISC has been eliminated by the IRS to help simplify the characterization of income. Beginning in 2025 and thereafter, any excess golden parachute payments are required to be reported on Form 1099-NEC, Box 3 — “Other Income.” 
 
Who This Affects: 

• Golden Parachute Payments Corporations when making golden parachute payments to an executive 

• Recipients of golden parachute payments who are required to determine whether corporations have accurately calculated and reported the payments 

Action Item: Don’t miss this – if your company makes excessive golden parachute payments also make sure the accounting or payroll system is adjusted to report these on Form 1099-NEC, no longer on a Form 1099-MISC. 

2. Form 1099-DA: New Reporting for Digital Assets 

• Form 1099-DA is a new IRS form made for reporting digital asset transactions, like cryptocurrency. 

• For Tax Year 2025, this form is being introduced so that the IRS can track crypto and other digital assets in a clear and consistent way. 

2026 and Beyond: 
Starting in 2026, brokers must report both the total money received (gross proceeds) and the original purchase price (cost basis) for digital assets. This helps the IRS calculate gains or losses more accurately. Brokers may similarly report on a basis for non-covered digital assets (e.g., certain NFTs and qualifying stablecoins) on an optional basis. When doing so, they must check Box 9 on Form 1099-DA to indicate that the digital assets are noncovered. 
 
Who This Affects: 

• Cryptocurrency traders and investors 

• Digital asset brokers and exchanges 

• Someone who sold crypto, NFTs or other digital assets in 2025 

Action Item: If you are a trader of digital assets, maintain complete written records of each purchase (including date), amount and fair market value. That will matter when basis reporting becomes required in 2026. 

3. Form 1099-R: New Code “Y” for QCDs 

For Tax Year 2025, the new distribution code — Code “Y”— added to Box 7 of Form 1099-R will make it easier for payees and issuers to distinguish a QCD.  

What is a QCD?   A Qualified Charitable Distribution (QCD) occurs when an individual aged 70½ or older sends money directly from their IRA to a qualified charity, allowing the donation to be excluded from taxable income. This is a tax-friendly means for retirees to satisfy their required minimum distributions (RMDs) while benefiting causes they believe in.

How Code Y Works: 
For proper reporting, Code Y must be used in combination with another code depending on whether the IRA is a Traditional or Roth type and the nature of the distribution as follows:  

• Code 7 + Y — for a normal QCD from a non-inherited IRA 

• Code 4 + Y — for a QCD from an inherited IRA 

• Code K + Y — if the QCD is made with IRA assets that don’t have an available fair market value. 

Who This Affects:  

• Retirees 70½ or older who are taking RMDs and giving to charity from their IRAs 

• IRA custodians and other financial institution 

• Tax preparers who work with retirement accounts 

Action Item: 
If you have already taken a QCD or plan to take one, check with your IRA custodian to ensure that the correct codes are used on your Form 1099-R so that they can be correctly excluded from taxable income. 

4. Form 1099-K: Threshold Reinstatement and Transition Period 

The threshold for 1099-K reporting has been a topic of confusion in recent years. Transitional relief for TPSOs is available by the IRS in Notice 2024-85 to be issued regarding Tax Year 2025.  

What Is a TPSO?  Third Party Settlement Organization (TPSO) is a payment gateway that enables and settles transactions between buyers and sellers. These organizations handle payments for users and must submit reports on certain payment transactions to the IRS via a 1099-K if they satisfy reporting thresholds.

2025 Threshold: 
TPSOs must report payments only if total payments made in a calendar year exceed $2,500. There’s no minimum number of transactions. 
 
2026 and Beyond: 
Staring in 2026, the reporting threshold will be reduced to $600, and all transactions will count —there’s no longer a limit on the number of transactions. This fits with the purpose of the American Rescue Plan Act but does so gradually. 
 
Who This Affects: 

• Gig workers, freelancers, and side hustlers 

• Entrepreneurs who use payment platforms to receive payments 

• Anyone getting paid through PayPal, Venmo, Cash App, and similar services 

Action Item: If you use payment systems for your business, go back and check how much you received this year. Reporting for 2025 is required only if aggregate payments are more than $2,500. Starting in 2026, if you receive more than $600, it must be reported on Form 1099-K. 
 
Be sure to keep a record of all your spending so that personal and business transactions are clearly separated.  

5. Form 1099-Q: New Checkboxes & Reporting Rollovers 

For Tax Year 2025 and beyond, the IRS has published a revised Form 1099-Q to provide improved reporting of distributions and rollovers for education expenses. 
 
New Checkboxes in Box 4: 
Box 4 on the form now has two checkboxes to show the type of distribution: 

• Box 4a — for Trustee-to-trustee transfers 

• Box 4b — for Qualified Tuition Program (QTP) to Roth IRA rollovers 

Why This Matters: 
These checkboxes make it easier for taxpayers, trustees, and the IRS to correctly identify the type of distribution and reduce reporting error. The new checkboxes help to clarify the education savings rollovers situation. One of the clarifications is the ability to roll the unused 529-plan funds into a Roth IRA (in case you meet certain requirements).  
 
Who This Changes:  

• Parents and students with 529 savings plans.  

• Beneficiaries that are rolling over funds from QTPs to Roth IRAs. 

• Educational institutions and plan administrators.  

Action Item: If in 2025 you took a distribution or made a rollover from a 529 plan, make sure that your Form 1099-Q is accurately reflecting the local identifier of the transaction in Box 4.  

Conclusion 

The ‍changes to the IRS 1099 forms for the 2025 tax year consist of significant alterations that go deep for businesses, freelancers, retirees, and brokers. Besides the reporting of golden parachute payments and digital asset transactions, the updates also feature new codes for charitable distributions and clearer rules for education rollovers — all geared towards correct and lawful tax filing.  

Switching over early means that you will be compliant, reduce the number of filing errors, and make tax season less‍‍‌ stressful. Being aware of it now will allow you to take the 2025 tax year in stride and thus, you will not have to worry about the ‍‌IRS. 

 

 Also read: How to Fill Out Form W-2 Online: A Step-by-Step Guide