If you receive payments through third-party payment networks such as PayPal, Venmo, Cash App, Etsy, Amazon, or similar platforms, you may receive a Form 1099-K, Payment Card and Third Party Network Transactions.
Form 1099-K reports the gross amount of payments processed through a payment platform during the tax year. If you use multiple platforms, you may receive a separate Form 1099-K from each company that meets the IRS reporting requirements for that year.
Common platforms that may issue Form 1099-K include:
- PayPal
- Venmo
- Cash App
- Etsy
- Amazon
- Other online marketplaces and payment processors
If you're required to receive a Form 1099-K, it's generally made available by January 31 following the end of the tax year. If you don't receive a paper copy, you may be able to download it directly from your payment provider's website.
What Does Form 1099-K Report?
Form 1099-K reports the gross payment amount processed through the platform.
Important things to remember:
- The amount reported is generally before fees, refunds, and other adjustments.
- The form reports payment activity, not necessarily taxable income.
- You should compare the amounts reported on the form with your own business records.
According to the IRS, the reporting thresholds apply only to transactions settled through third-party payment networks. Different reporting rules may apply to payment card transactions.
I Received a Form 1099-K. What Should I Do Next?
Once you receive your Form 1099-K:
- Review the information carefully.
- Compare the reported amounts to your business records.
- Verify that the form belongs to you.
- Confirm the gross payment amounts appear accurate.
- Report any taxable income on your tax return.
Your books and records should always be your primary source for determining taxable income. Form 1099-K is simply one tool used to verify those amounts.
Do I Have to Pay Tax on the Income Reported on Form 1099-K?
Whether the payments reported on Form 1099-K are taxable depends on what the payments represent.
Taxable Payments
You may owe tax if the payments were received for:
- Goods you sold
- Products you manufactured
- Services you provided
- Self-employment activities
- Business income
If the activity produced a profit, the income generally must be reported on your tax return.
Non-Taxable Payments
Not every payment reported through a payment app is taxable.
Examples of non-taxable transactions may include:
- Gifts from friends or family
- Personal reimbursements
- Shared household expense repayments
- Repayment of money you loaned to someone
These types of transactions generally aren't taxable simply because they were processed through a payment platform.
What If the Information on My Form 1099-K Is Incorrect?
Your business records should support the income you actually received.
If your Form 1099-K contains errors, such as:
- Incorrect payment amounts
- Transactions that don't belong to you
- An incorrect taxpayer identification number
- Duplicate reporting
you should contact the issuer of the Form 1099-K and request a corrected form. Keep documentation showing the error and any communication with the payment network or marketplace.
You can review this Knowledgebase article on how to report a 1099-K received in error here.
How Do I Remove a Form 1099-K From My Return?
If you entered a Form 1099-K into the program by mistake or reported amounts in error:
- Return to the Form 1099-K entry screen.
- Edit the form.
- Remove the amount that was entered in error.
- Save the updated entry.
Even after removing the information, the Form 1099-K menu item may continue to appear under the Income section of the software. This is expected behavior.
If you don't need to report a Form 1099-K, simply leave the section blank and ignore the menu item. The software doesn't currently provide a way to remove the menu entry itself.
Additional Information
Review these Knowledgebase articles below for additional information about Form 1099-K: