A 1099-K form is used during the tax season. It is a fairly new form that the IRS created in 2013. The form will be sent to people who have received over $20,000 in income from online debit or payment card transactions during a calendar year. This is used for people who make money online using stores through sites like Etsy, Amazon or Paypal. For the form to be sent, they must have received more than $20,000 in credit card payments in 200 transactions or more. Both of these criteria must be met for the form to be sent.
The 1099-K form is used to help someone verify how much income they really made through an online store or sales. This can ensure that people are reporting their income properly on their tax return. The form can come in handy if you aren't sure how much you made from a certain store, or if you want to double check your income records.
The 1099-MISC is issued to independent contractors or self-employed people who have been paid $600 or more during a fiscal year. You may not receive a 1099-MISC if you were paid less than $600, but you are still responsible for reporting all income.
The 1099-K is used by credit card companies and third-party payment processors to report payments that they process for third parties. You will receive a 1099-K if you accepted credit cards, debit cards, or prepaid cards and had over $20,000 in sales and more than 200 reportable payment transactions through a third party processor during a tax year.
The 1099-K is a newer tax form that came into existence as part of the 2008 Housing Assistance Tax Act. Before the 1099-K was used, the many businesses used 1099-MISC forms to report business of more than $600 annually.
Most retailers who accept online payments from customers will receive a 1099-K once its annual activity has met the following:
The 1099 K contains information for filer’s name and contact information, filer’s status, reported transactions classification, payee’s name and contact information, PSE’s name and phone number, account number, and information regarding reportable transactions.
To complete your 1099 K, you should fill out:
The information that you receive on your 1099-K can be used to update your books and records to reflect your accurate business income. You must report on your income tax return all of the money that your receive from your business. Your 1099-K amounts plus any cash, checks, or other form of payments combined will be used to calculate your gross receipts for your income tax return.
When you receive your Form 1099-K, you should ensure:
If there is an error on your form, you should request a corrected 1099-K from the PSE.
Sometimes, the total gross payment amount that is on your Form 1099-K does not belong to you. This might happen if:
If you have any questions about the amount reported, contact the Filer. If you have any questions about the merchant or third party transaction network, find their contact information on the lower left corner of Form 1099-K.
If you are self-employed, you should report your 1099-K payments on Schedule C on separate revenue line. If you are filing a Schedule F for farming, you will report 1099-K payments there.