Looking for an efficient way to file your 1099-K returns online? Now you can file Form 1099-K with ease through the IRS-approved Tax1099. eFile your 1099-K forms, verify your vendor TINs, and comply with the IRS easily
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Two major changes were introduced by the IRS for the 2023 tax year.
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Effective from the 2023 tax year, the IRS requires all payment card companies and third-party networks to report all 1099-K payments made in a tax year with a minimum reportable gross total of $600.
Form 1099-K helps the IRS understand the income a payee generates through retail sales transactions made online or via payment cards.
When the third-party entities send a copy of Form 1099-K to the IRS, the form reports the gross amount of the transactions occurring in a tax year, notifying the IRS about the income generated by the payee through 1099-K payments.
Form 1099-K is used for reporting the gross total of third-party network payments and payment card transactions amounting to $600 or higher. It helps the IRS understand if the payee has reported all the income as received from the 1099-K payments.
Each time a retailer accepts online payments or payments made via credit cards, a third-party enables the transaction and records the payments made to the retailer.
In this context, the payer (third-party network or payment card entity) must issue Form 1099-K to the payee reporting all payments made to the participating payee in a tax year. Form 1099-K is usually sent to the payee before the IRS-recipient deadline, 31 January.
Third-party payment networks, such as PayPal, Venmo, Google Pay, and Amazon Pay are required to issue a copy of the Form 1099-K to the participating payees and file the approved return with the IRS.
Similarly, payment card companies, such as MasterCard, VISA, Jupiter, and RuPay are required to issue a copy of Form 1099-K to the payee and the IRS, respectively.
A participating payee or a retail seller is someone who agrees to receive payments from the third-party network or payments card entity each time a sale has been enabled through their network framework.
The payee receives a Form 1099-K at the end of the year (around January before the 1099-K recipient deadline) from the payer. The 1099-K return reports third-party network and payment card transactions with a gross total of $600 or more.
Prior to the 2023 tax year, the IRS required the third-party network entities and payment card entities to report with Form 1099-K only if:
For returns submitted after the 2022 calendar year, the IRS requires the filers to adapt to the new updates and report per the prescribed changes.
Individuals, companies, corporations, partnerships, LLCs, and more that earn income through payment cards and third-party networks online must receive a Form 1099-K from their payers starting from the 2022 calendar year.
Form 1099-K is a summary of all transactions that took place in a year and the gross total earned by the payee in a tax year.
Each time a retailer earns through various online streams, the payer must record and report such transactions in the 1099-K return and send it to the payee at the end of the year.
It is important not to confuse Form 1099-K with Form 1099-B. While Form 1099-K is only a summary of the gross total payments made to the payee, Form 1099-K is a comprehensive report of all 1099-K transactions that took place in a year, providing specific details for each transaction.
Here’s how to understand the differences between the reporting requirements for various 1099 forms.
Use this box to report the gross amount of payment card/third-party network payments made during a calendar year.
Use this box to report all transactions in which a payment card was not used or if the card number was added by default to the terminal.
Use this box to report the merchant category code, which is typically used for payment card/third-party network transactions.
Use this box to report the number of transactions processed in a calendar year.
Use this box to report the total federal tax withheld
Valid TIN/legal name information is critical for this box.
Use this box to report the gross amount of payment card/third-party network payments you’ve processed in the calendar year.
Use this box to report the state and local income tax withholdings
The IRS requires all third-party payment networks and payment card entities to follow the new updates as introduced to be effective from the 2023 tax year.
Payment networks and credit card companies are required to report all third-party payments made to the participating payee in a calendar year with a minimum reportable gross total of $600. There is no threshold on the transaction count.
IRS Form 1099-K furnished to the recipients by January 31st and eFiled with the IRS by March 31st each year. The 1099-K paper filing deadline is February 28th.
Here are the 1099-K deadlines for the 2023 tax year:
|Filing Type||Due Date|
|Recipient Copy||Jan 31, 2023|
|IRS eFile||March 31, 2023|
|IRS Paper Filing||Feb 28, 2023|
You can easily file your 1099-K forms online with Tax1099’s simplified 3-step eFile process.
Import your payee transaction data within seconds using the available integrations. This will enable you to gather all the necessary data to prepare your returns accurately. At this point, you can opt for API services to skip manual data entry.
Once you furnish the data on the 1099-K form, check for relevance and accuracy. Check your own transaction data and compare it with the information reported on Form 1099-K. Edit the forms to correct any incorrect details, including incorrect TINs and the legal names of your payees.
Once you’re through with the review process and confident about your reports,
hit the ‘eFile’ submission button to transmit your returns directly to the IRS within seconds.
And that’s it!
Prepare and eFile your 1099-K returns seamlessly with Tax1099, a digital tax compliance platform approved by the IRS.
With advanced bulk eFiling solutions, preparing and managing your 1099-K filings would be a breeze. Further, our Tax1099 API solutions enable you to prepare, file, and manage your 1099-k returns effortlessly.
Tax1099’s real-time TIN Matching system helps you verify millions of payee TINs within seconds, preventing IRS TIN discrepancies and incorrect TIN penalties. This also eliminates the risk of reporting inaccurate vendor data.
Verify your payee TINs, prepare your 1099-K forms quickly, and eFile thousands of forms at once with Tax1099 – a trusted choice for 150,000 businesses.
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The CFSFP Combined Federal State Filing Program allows parts of your federal eFile to be transmitted to the state at no extra charge. Non-participating states must receive a direct file. Learn more about state filing here.