IRS Form 1099-K is a tax form used by the Internal Revenue Service (IRS) to report certain payment transactions. These transactions include payments processed through credit cards, third-party networks or other online payment processors.

The form is important for individuals, small business owners and independent contractors who receive payments through these channels. Understanding how the form works helps ensure accurate reporting of taxable income and compliance with IRS requirements.

Who Needs to Receive a Form 1099-K?

Form 1099-K must be issued by payment settlement entities (PSEs). These include banks, credit card companies and online payment processors like PayPal or Stripe.

You should receive a Form 1099-K if:

  • You are an individual, small business owner or independent contractor.
  • You received payments through credit cards, debit cards or third-party networks.
  • Your total payments exceeded $20,000 in a calendar year and you had more than 200 transactions.

Some states use lower thresholds, so you may receive a Form 1099-K even if you didn’t meet the federal limit.

Where to Get Form 1099-K?

The payment settlement entity that processed your transactions is required to issue the form. You should receive it by January 31st each year.

If you don’t receive the form:

  • Contact the payment settlement entity directly to request a copy.
  • If necessary, request a copy from the IRS, but be aware this may take several weeks.

How to Use Form 1099-K?

Form 1099-K shows the gross total of all payment transactions processed on your behalf in a tax year. This amount must be reconciled with your own business or personal income records.

Note:

  • The form reports gross payments, not net income. Fees, refunds and chargebacks may reduce your actual taxable income.
  • You are responsible for reviewing the form, matching it to your own financial records and reporting the correct amount of taxable income.
  • Failing to reconcile may result in discrepancies that could trigger an IRS audit.

Common Questions About Form 1099-K

What if I disagree with the information on Form 1099-K?
Contact the payment settlement entity immediately to resolve the error. If the issue remains unresolved, you must still report the income as shown and explain the discrepancy on your tax return.

Do I need to attach Form 1099-K to my tax return?
Yes. Form 1099-K should be included with your return to report income received through credit card or third-party processors.

What if I did not receive a Form 1099-K but earned payment through these channels?
You must still report all income. Use your business or bank records to calculate the correct amount and include it on your return, even if the form is missing.

What happens if I don’t report income from Form 1099-K?
Failure to report income may result in IRS penalties, interest charges or an audit. Reporting all income accurately is the only way to be compliant with tax laws.

Why Accuracy Matters

The IRS gets a copy of every 1099-K issued. If the income you report doesn’t match the amount listed, the IRS will flag your return. This can lead to additional scrutiny, requests for documentation and potential penalties.

Reconciling your own records against the 1099-K ensures your tax filings are consistent with IRS data.

Consult a Professional With Questions

IRS Form 1099-K is an important part of income reporting for individuals, small business owners and independent contractors. It provides the IRS with a clear record of gross payments you received through third-party processors.

Reporting this information accurately prevents penalties, reduces the risk of an audit and ensures compliance with tax law.

If you have questions about Form 1099-K or if your IRS debt is over $10,000, contact one of our Tax Specialists today. We can help you interpret your 1099-K, manage your IRS obligations and protect your financial future.