What You Need To Know About The 1099K For 2022
May 09, 2022
What is an IRS Form 1099-K?
Form 1099-K, Payment Card and Third-Party Network Transactions, is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:
From payment card transactions (e.g., debit, credit, or stored-value cards), and/or
In settlement of third-party payment network transactions above the minimum reporting thresholds as follows:
For returns for calendar years prior to 2022:
Gross payments that exceed $20,000, AND
More than 200 such transactions
For returns for calendar years after 2021:
Gross payments that exceed $600, AND
Any number of transactions
A 1099-K is a transaction record from third-party payment networks such as PayPal or Venmo and credit card providers. They fill out the 1099-K and send copies to the IRS, state and person receiving the payments. The objective is to ensure people report their business income on their tax returns.
An entities are required to file and send a 1099-K if it transfers at least $600 to you during the year. The $600 threshold is an aggregate, meaning that even if different people send you small amounts of money through, say, PayPal, throughout the year, you’ll get a 1099-K from PayPal if those payments add up to at least $600.
A 1099-K is not the same as a W-2, which reports income paid to employees.
What is a 1099-K used for?
A 1099-K is an information return, meaning you can use it to calculate other things on your tax return. Specifically, a 1099-K can help you calculate how much business income you received.
Who qualifies for a 1099-K?
Anybody who accepts payments from credit cards or third-party payment networks such as PayPal or Venmo might receive a 1099-K.
A Form 1099-K has your Social Security number TIN on it, so the IRS will know you’ve received the money.
Do I have to report 1099-K income on my taxes?
There are two things to remember:
1) You're required to report business income on your taxes.
Your 1099-Ks can help you understand how much you received from clients through credit cards, Venmo, PayPal or similar payment methods.
2) Be sure you don’t double-report your income.
If you are an independent contractor and received a 1099-NEC and you received a 1099-K for the same amount, do not report your income twice. The 1099-K is an informational form you can use to verify that you are reporting your income accurately.