eFile 1099-K Online

What is IRS Form 1099-K?

• Form 1099-K is an IRS return in the 1099 series that primarily focuses on payment cards and third-party network transactions reporting.

Major Changes To Form 1099-K Reporting In 2023

Two major changes were introduced by the IRS for the 2023 tax year.

• 1. Third-party networks and payment card companies must report payments made to the participating payees with a minimum reportable gross total of $600.
• 2. Previously, the payers were required to report with Form 1099-K only if the payment transactions volume exceeded the threshold of 200 AND if the gross total of the reportable transactions amounted to $20,000. The new update abrogates these preconditions, and mandates reporting all 1099-K payment transactions regardless of the transaction count.

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When Is The 2023 1099-K Change Effective?

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.

What Is The Purpose Of Form 1099-K?

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.

What Is Form 1099-K Used For?

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.

When Is Form 1099-K Issued?

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.

Who Issues 1099-K Forms?

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.

Who Receives Form 1099-K?

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.

Income Thresholds For 1099-K Forms - Before 2023

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:

• Gross payments exceed $20,000 in a tax year AND
• More than 200 such transactions were recorded

New Gross Payment Threshold For 2023 1099-K Form

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.

• Report if the minimum reportable gross total amounts to $600 or higher
• Report ALL reportable third-party network and payment card transactions

Who Qualifies For A 1099-K In 2023?

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.

What Is Reported On A 2023 1099-K Form?

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.

Form 1099-K Vs Form 1099-MISC (Now the 1099-NEC for Non-Employee Compensation)

Here’s how to understand the differences between the reporting requirements for various 1099 forms.

• Form 1099-K specifically reports certain reportable payments made to qualified payees by third parties
• Form 1099-NEC reports non-employee compensations (including cash payments) made to a variety of vendors
• Form 1099-MISC only reports specific miscellaneous payments, such as royalty, fees paid to an attorney, and such.

What are the Boxes in Form 1099-K with Instructions 2023

Box 1a – Gross Amount Of Payment Card/Third-party Network Transactions

Use this box to report the gross amount of payment card/third-party network payments made during a calendar year.

Box 1b – Card Not Present Transactions

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.

Box 2 – Merchant Category Code

Use this box to report the merchant category code, which is typically used for payment card/third-party network transactions.

Box 3 – Number Of Payment Transactions

Use this box to report the number of transactions processed in a calendar year.

Box 4 – Federal Income Tax Withheld

Use this box to report the total federal tax withheld

Valid TIN/legal name information is critical for this box.

Boxes 5a–5l – Gross Amount Of Payment Card/Third-party Network Transactions Made

Use this box to report the gross amount of payment card/third-party network payments you’ve processed in the calendar year.

Boxes 6–8 – State Income Tax Withheld

Use this box to report the state and local income tax withholdings

New Form 1099-K Reporting Requirements 2023

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.

1099-K Deadline and Important Dates

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:

How To eFile 1099-K Online For 2023

You can easily file your 1099-K forms online with Tax1099’s simplified 3-step eFile process.

Step 1: Import Your Payee Data

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.

Step 2: Verify TIN + Validate Form Data

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.

eFile Form 1099-K

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!

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Tax1099 API For Form 1099-K Reporting 2023

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