What is Form 1099-K?

Purpose and Use of IRS Form 1099-K

Form 1099-K Overview

Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report payment transactions. It is issued to report payments received through:

- Payment card transactions (credit, debit, or stored value cards).

- Third-party network transactions from payment apps or online marketplaces (also known as third-party settlement organizations or TPSOs).

Who Issues Form 1099-K

- Payment card companies and third-party networks are required to issue Form 1099-K.

- These entities must send a copy to both the IRS and the recipient of the payments.

Who Receives Form 1099-K

- Individuals or businesses that receive payments for the sale of goods or services through payment cards or TPSOs.

- Recipients of payments that exceed certain thresholds are particularly likely to receive this form.

Reporting Thresholds

- For tax year 2023, the threshold for TPSOs to report is over $20,000 and more than 200 transactions.

- Despite the American Rescue Plan Act of 2021 lowering the threshold to $600, the IRS has delayed this change for tax year 2023, as noted in [Notice 2023-74](https://www.taxpayeradvocate.irs.gov/news/nta-blog/tips-for-avoiding-incorrect-forms-1099-k/2024/02/).

Exclusions from Form 1099-K Reporting

- Personal payments received from family and friends are not reported on Form 1099-K.

- Payments that are not for the sale of goods or services, such as gifts or reimbursements for shared expenses, should not be included.

Using Form 1099-K for Tax Filing

- Form 1099-K should be used along with other tax records to accurately report taxable income on tax returns.

- It reports gross payments, and taxpayers must determine the correct taxable amount, considering any applicable deductions or non-taxable amounts.

Actions for Recipients of Form 1099-K

- Verify the accuracy of the information on the form.

- Use the form in conjunction with other records to report income correctly.

- Address any discrepancies or incorrect information by contacting the issuer of the form.

Importance of Accurate Classification

- It is crucial to classify payments correctly in payment apps to avoid receiving a Form 1099-K for non-business transactions.

- Proper classification helps prevent misreporting and potential tax issues.

For more detailed guidance on what to do if you receive a Form 1099-K, you can refer to the IRS's dedicated page on this topic: [What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k).

Additional Considerations

- Even if you do not receive a Form 1099-K, you are still required to report all income from the sale of goods or services.

- Good recordkeeping is essential to support the income and deductible expenses reported on your tax return.

- If you sell personal items at a loss, you have options for reporting this on your tax return to avoid paying taxes on the reported gross income.

For further information, you can consult the [Instructions for Form 1099-K](https://www.irs.gov/instructions/i1099k) provided by the IRS.

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Sources:

Understanding your Form 1099-K | Internal Revenue Service 2024-08-03

Form 1099-K FAQs: What to do if you receive a Form 1099-K 2024-08-03

What to do with Form 1099-K | Internal Revenue Service 2024-08-03

Form 1099-K FAQs: General information | Internal Revenue Service 2024-08-03

Heard Loud and Clear: IRS Postpones Implementation of $600 Form 1099-K Reporting by a Year 2024-07-31

Instructions for Form 1099-K (03/2024) | Internal Revenue Service 2024-08-03

TAS Tax Tip: Use caution when paying or receiving payments from friends or family members using cash payment apps 2024-08-03

I received a Form 1099-K | Taxpayer Advocate Service 2024-08-03

Form 1099-K - TAS | Taxpayer Advocate Service (TAS) 2024-07-31

Tips for Avoiding Incorrect Forms 1099-K | TAS 2024-07-29