Form 1099-K: Payment Card and Third Party Network Transactions

A 1099-K is an IRS tax form used to report payment card and third-party network transactions. In simpler terms, it details income you earned through:

  • Credit card transactions (Visa, Mastercard, etc.)
  • Debit card transactions
  • Payment settlement services like Venmo, PayPal, Zelle, etc.
  • Online marketplaces like Etsy, eBay, or platforms facilitating the sale of goods or services (think Uber, Lyft, Doordash)

Who Receives a 1099-K?

You'll typically receive a 1099-K if, in a calendar year:

  • Your gross payment transactions exceed $20,000 AND
  • You have more than 200 transactions

Important Note: The IRS initially planned to lower the reporting threshold to $600 for tax year 2023. However, this change has been delayed, and the higher thresholds mentioned above remain in effect.

What Information Does a 1099-K Include?

A 1099-K form should provide the following details:

  • Payer information: The name and tax identification number of the payment settlement entity (PSE) sending the form (e.g., Venmo, PayPal)
  • Your information: Your name and Taxpayer Identification Number (TIN)
  • Amount in Box 1: The total gross amount of payment transactions received during the year

What to Do with a 1099-K?

A. Report the income: The income reported on your 1099-K should be included in your tax return. How you report it depends on your business structure (sole proprietor, LLC, etc.). Consult a tax advisor for specific guidance.

B. Compare with your records: It's wise to compare the information on your 1099-K with your own transaction records. Report any discrepancies to the issuer of the form.

C. Keep a copy for your records: Retain a copy of your 1099-K with your tax documents for several years.

Download the Form 1099-K and its instructions attached below.