Form 1099-K FAQs: General information

A1. Form 1099-K is an information return used to report payments you received during the year from:

• Credit cards, debit cards or stored-value cards such as gift cards (payment cards)
• Payment apps or online marketplaces for goods or services (TPSOs)

You should receive a Form 1099-K if you sold a good or provided a service, you were paid through a payment app or online marketplace, and your gross payments and transactions are in excess of the reporting threshold, or you accepted a payment from a payment card for any amount. You may have a tax obligation if you had a gain on the sale of goods or received payment for services you provided.

Form 1099-K is an information return that payment apps and online marketplaces provide when you use them for selling goods or providing a service. You can use the information on the Form 1099-K with your other tax records to determine your correct tax owed. See Understanding your Form 1099-K for more information.

Third party information reporting for certain payments is required by law and has been shown to increase voluntary tax compliance, improve tax collections and assessments within the IRS, and thereby reduce the tax gap.

A2. There is no threshold amount that must be met to receive a Form 1099-K due to payments received through a payment card transaction. Therefore, if you received $0.01 of payments from a payment card transaction, you should receive a Form 1099-K for those payments.

There is a threshold for payments received through a TPSO. TPSOs are required to report when total gross payments for goods or services exceed $20,000 and there are more than 200 transactions for a payee. Your state may have a lower reporting threshold for TPSOs, which could result in you receiving a Form 1099-K, even if the total gross payments and transactions did not exceed the federal reporting threshold.

A3. The term “payment card” includes credit cards, debit cards, and stored-value cards (including gift cards), as well as payment through any distinctive marks of a payment card (such as a credit card number).

A payment card is issued according to an agreement that provides all of the following: one or more issuers of the cards; a network of persons unrelated to each other, and to the issuer, who agree to accept the cards as payment; and standards and mechanisms for settling the transactions between the merchant acquiring entities and the persons who agree to accept the cards as payment.

A4. A TPSO is the central organization that has the contractual obligation to make payments to participating payees (generally, a merchant or business) of third party network transactions. An example could include apps used to handle the money transfer between buyers and sellers.

A5. Not necessarily. The federal reporting threshold of over $20,000 in payments and more than 200 transactions is a reporting requirement for TPSOs, but a TPSO may still send a Form 1099-K for payments for goods or services for amounts lower than the thresholds. In addition, you may receive a Form 1099-K from other payment settlement entities, such as merchant acquiring entities, because they do not have a de minimis reporting threshold. In addition, if a TPSO performed backup withholding under IRC 3406(a), Requirement to deduct and withhold, for a payee during the prior year they must file a Form 945, Annual Return of Withheld Federal Income Tax, and a Form 1099-K with the IRS and furnish a copy to the payee. Also, your state may have a lower reporting threshold for TPSOs, which could result in you receiving a Form 1099-K, even if the total gross payments and transactions did not exceed the federal reporting threshold.

A6. The entity submitting the instructions to transfer funds to the participating payee's account is responsible for reporting payment card transactions. In this case, the electronic payment facilitator is responsible for reporting because it is the entity submitting the instructions to transfer the funds in settlement of the payment card transactions.

A7. Yes, the Form 1099-K reporting threshold doesn’t affect whether payments are taxable or whether a tax return must be filed.

All income, no matter the amount, is taxable unless the tax law says it isn’t – even if you don’t get a Form 1099-K. Income also includes amounts not reported on forms, such as payments you receive in cash, property, or services.

A8. The gross payment amount (Box 1a) on Form 1099-K reports the total, or gross, dollar amount of reportable payment transactions. It doesn't include adjustments for fees, credits, refunds, shipping, cash equivalents or discounts. Those items are not income. Taxpayers can deduct those items from the gross amount when including the income on their tax return.

The gross payment amount also does not account for the original purchase price, or basis, of any items sold and whether the items were sold at a gain or loss. For more information on how to establish this basis, go to IRS.gov: Publication 551, Basis of Assets PDF.

Taxpayers will need to use their Form 1099-K with other tax records to help figure and report their correct income on their tax return.

A9. No. You should not receive a Form 1099-K for making purchases. Form 1099-K is used to report certain payments that you received for selling goods or providing services.