1099 Tax Reporting for Spiritual Freelancers in 2026
OBBBA raised 1099-NEC threshold to $2,000 for 2026. Schedule C at $400+ net. Crypto needs manual tracking. General info - consult a tax professional.
This article provides general information about US tax reporting requirements. It is not tax advice. Consult a qualified tax professional for guidance specific to your situation.
The One Big Beautiful Bill Act (OBBBA), signed in 2025, changed several rules that affect self-employed practitioners in the US. The most relevant for spiritual freelancers: the 1099-NEC reporting threshold moved from $600 to $2,000, and several tax benefits for the self-employed became permanent. Here's what changed and what stayed the same.
The Key Distinction: Sender's Threshold vs. Your Reporting Obligation
The $2,000 threshold is a rule for whoever pays you - your client, a platform, a business. It determines when they are required to send you a 1099-NEC form.
It does not determine when you must report income.
You report all business income regardless of whether you receive a form. If your net earnings from self-employment reach $400 in a year, you file Schedule C. The $2,000 threshold only means your client is not required to generate paperwork - it doesn't reduce what you owe.
What Changed in 2026
1099-NEC: $600 Becomes $2,000
Starting January 1, 2026, under the OBBBA: a client or business that pays you for freelance services must file a 1099-NEC only when they pay you $2,000 or more in a calendar year (adjusted for inflation beginning 2027).
Previously the threshold was $600. In practice:
- A client who paid you $800 for readings in 2025: they were required to send a 1099-NEC
- The same client paying you $800 in 2026: no longer required to send one
- You still report the $800 income on Schedule C
Source: tax47.app/blog/1099-nec-2000-threshold-2026 (2026); selfemployed.com/news/self-employed-tax-changes-2026 (2026)
1099-K: No Change
The 1099-K threshold for payment processors (Venmo, PayPal, Stripe) did not change with the OBBBA. In 2026, those platforms send a 1099-K when you receive more than $20,000 and more than 200 transactions in a year.
This applies to the payment processor's reporting. Again, your obligation to report income is separate. Source: taxact.com/new-form-1099-k-reporting-thresholds (2026).
OBBBA Benefits That Became Permanent
QBI deduction (Section 199A): The 20% qualified business income deduction, which had been set to expire, is now permanent. This deduction reduces your taxable income (not your self-employment tax) by up to 20% of qualified business income. Consult a tax professional to determine if your practice qualifies.
100% bonus depreciation: Restored and made permanent. If you purchase equipment - a laptop, a camera for online sessions, lighting for your studio space - you can deduct the full cost in the year of purchase rather than depreciating it over multiple years. Source: selfemployed.com/news/self-employed-tax-changes-2026 (2026).
Schedule C: When You File It
Schedule C is your profit and loss statement as a sole proprietor or single-member LLC. You file it when your net earnings from self-employment reach $400 in a year.
Net earnings | Action |
|---|---|
Under $400 | Generally no SE tax; confirm with a tax professional |
$400 or more | Schedule C required |
Any amount | All income is taxable regardless of 1099 receipt |
Self-employment (SE) tax is 15.3% of net earnings and covers Social Security and Medicare. This applies on top of income tax. The QBI deduction reduces income tax but not SE tax. Source: sdocpa.com/schedule-c-guide (2026).
Platform-Specific Reporting
Gumroad
Gumroad became a Merchant of Record (MoR) in January 2025. They collect and remit sales tax and VAT automatically. What they pay out to you is net of their fees (10% + $0.50 per transaction). You report the net amounts Gumroad pays to you as income on Schedule C.
Gumroad may send a 1099-K if your payouts reach the $20,000/200-transaction threshold (as a payment processor). Verify current reporting thresholds directly with Gumroad, as MoR status can affect which form they use.
Payhip
Payhip handles EU VAT. For US income reporting, Payhip sales flow through Stripe or PayPal. Your income is what Payhip disburses to you after their fee and payment processing charges.
NowPayments (Crypto)
NowPayments is not a US financial institution and does not issue 1099 forms. Crypto payments are taxable under US law.
Each crypto payment you receive is a taxable event. The taxable amount is the USD value of the cryptocurrency at the moment you receive it. You need to track:
- Date of each payment
- Amount in cryptocurrency
- USD value at time of receipt (use the exchange rate on that date)
This log becomes your Schedule C income record. Tools like Koinly and CoinLedger can import transaction histories to generate tax reports - verify current NowPayments integration support before relying on automated imports.
See accepting crypto tips for spiritual creators for crypto payment setup.
Year-End Checklist
- Gather all payment platform statements (Gumroad, Payhip, Stripe, PayPal)
- Pull your crypto transaction log with USD values at each receipt date
- Total gross income from all sources
- List deductible business expenses (software, home office portion, equipment purchased this year)
- Calculate net earnings; if $400+, prepare Schedule C
- Check whether any clients or platforms send a 1099-NEC or 1099-K; cross-reference with your records
- Consult a tax professional if you have crypto income, significant deductions, or income over $50K
For deduction specifics, see tax deductions for your spiritual business. For non-US practitioners selling digital products to international clients, see non-US tax for digital services.
FAQ
If I don't receive a 1099, do I still owe tax?
Yes. The 1099 is the payer's paperwork obligation, not your reporting trigger. The IRS expects you to self-report all business income. Receiving no 1099-NEC because a client paid you $1,500 (under the new $2,000 threshold) doesn't reduce your tax liability - that $1,500 still goes on Schedule C.
Does the $2,000 threshold apply to payments from platforms like ClickBank or Gumroad?
Platforms may use different thresholds depending on how they classify the payment (1099-NEC vs. 1099-K vs. their own internal threshold). The $2,000 threshold set by the OBBBA applies to payers of non-employee compensation. Payment processors have separate 1099-K rules ($20,000/200 transactions). When in doubt, report all income and verify platform-specific reporting with a tax professional.
How does self-employment tax work if I only made $3,000 from readings this year?
$3,000 gross minus business expenses equals net earnings. If net reaches $400+, you owe SE tax at 15.3% of net earnings, plus income tax on the net amount. The QBI deduction can reduce the income tax portion if you qualify. A tax professional can run the actual numbers for your situation.
I received crypto payments. How do I find the USD value for each transaction?
Use CoinMarketCap or CoinGecko historical price data for the date of each transaction. Enter the exact date, find the price at the time of receipt, multiply by the quantity received. Keep a spreadsheet with date, coin, amount, and USD value. Koinly and CoinLedger can automate this if they support your wallet address - check current integration availability before relying on it.
What if I work with clients in other countries? Do I still file US taxes?
US citizens and residents file US taxes on worldwide income regardless of where clients are located. If your client is in the UK and pays you via Wise, that income is US-taxable. Non-US tax obligations in the client's country (VAT, withholding) are a separate question. See VAT for digital services for the EU/UK side of this.