Does your business accept online payments? Then you’ll probably receive a 1099-K this tax year. 

Here’s everything you need to know about this form and why you might be receiving one this year when you haven’t in the past.

What is Form 1099-K?

Form 1099-K is the IRS form used to report credit and debit card transactions, as well as third-party network payments. 

In the past, the minimum reporting threshold was 200 transactions or $20,000, meaning a payment network had to report anything that met or exceeded those numbers using Form 1099-K.

For the 2023 tax year, the minimum has gone down to $600, and the number of transactions doesn’t matter. 

This means that small businesses, freelancers, independent contractors, and self-employed workers will likely receive and/or use more 1099-K forms than they have in previous tax years.

Who files Form 1099-K?

The good news is you probably don’t have to worry about filing Form 1099-K unless you’re a third-party payment network. Payment networks, such as Venmo and PayPal, will file this form with the IRS and send a copy to you. 

So why does it matter to you? Because you can use this form to help track your taxable income, as it should include a record of all significant financial payments you received online.

How do I know if I’ll get a 1099-K Form?

If you’re an online (or partly online) business that accepts credit/debit cards and other forms of electronic payment, you’ll likely receive a 1099-K from any third-party payment providers you use.

You should receive your form by January 31 of the following year. The IRS will also get copies of any 1099-K forms you receive.

How do I report a 1099-K Form?

Your 1099-K Form will likely include the total of all your payment transactions for the year (assuming they add up to $600 or more). Just be aware that this will probably be the amount minus any adjustments like credits, discounts, fees, and refunds.

In addition to the information on your 1099-K, don’t forget any other sources of income you may have had in the previous year from things like cash, checks, and tips.

Once you have your total income amount ready, you can report it as follows:

• For corporations and partnerships: Forms 1120, 1120S, or 1065

• For sole proprietors: Schedule C on Form 1040

• For farms: Schedule F on Form 1040

You can find more information about the 1099-K Form on the IRS website.