The Form 1099-K reports the gross payment of transactions received from third-party payment networks that total over $20,000 and 200 transactions. If you use multiple platforms, you will receive a 1099-K for each one that meets the threshold. Some examples of the platforms that will be reporting the transactions on a Form 1099-K are; Paypal, CashApp, Amazon, Venmo, Etsy, and Zelle. If you do meet this threshold, you may find a Form 1099-K(s) in your mailbox by January 31st of the upcoming tax season. If you do not receive the Form 1099-K, you may be able to download it directly from the network's site.
Please note: according to the IRS, "The minimum reporting thresholds apply only to payments settled through a third-party network; there is no threshold for payment card transactions."
I have received my Form 1099-K, now what?
Now that you have received your Form 1099-K you will want to check that the income being reported on the Form 1099-K matches your business records. Once you have verified the information reported is correct, you will need to report the amounts listed on your Form 1099-K on your taxes.
Do I have to pay taxes on the income listed on the 1099-K?
Whether you have to pay taxes on the income from the Form 1099-K will depend on the situation. If the Form 1099-K is from income you received due to something you have sold or a service you provided related to your business it is likely you will owe taxes if you have made a profit. However, if the income if money that was given as a gift from friends and family or due to personal reimbursements, you will not owe taxes.
I need to correct the information reported on my 1099-K
Your business records should reflect your business income which would include the amounts that are reported on your Form 1099-K. If you receive a Form 1099-K that needs to be corrected due to something such as it doesn't belong to you or the gross amount reported is incorrect you will need to contact the PSE (Payment Settlement Entity). Their contact information should be listed on the bottom left of the Form 1099-K just below their address information. Be sure to request a and retain copy of the corrected Form 1099-K as well as any other correspondence you have with the PSE.
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