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Form 1099-K Instructions: A Filing Guide for Payers of Card & Online-Platform Payments

If you process payment cards or settle online-platform payments for sellers, Form 1099-K is one of those filings you want right the first time. This guide walks you through Form 1099-K instructions—who has to file, 1099-K thresholds for 2026 filings, how to handle the key boxes, and the exact 2026 due dates.

What Is Form 1099-K and Why Do Payers File It?

Form 1099-K reports gross payments a business or individual receives through payment card transactions (credit/debit/stored-value cards) and third-party network transactions (online platforms/payment apps).

If you’re the payment settlement entity (PSE)—either a merchant acquiring entity (for card payments) or a third-party settlement organization (TPSO) (for third-party network payments)—you must file Form 1099-K with the IRS and give a copy to the payee.

When you file accurately:

  • You help the IRS match reported payment totals, which reduces avoidable notice-driven follow-ups.
  • You reduce penalty exposure—information return penalties can start at $60 per return (if corrected within 30 days), can be $340 per return if you don’t file corrections, and are at least $680 per return for intentional disregard (with no maximum). Separate penalties can also apply for failing to furnish correct payee statements.
  • You build trust with payees by delivering clean, on-time forms they can reconcile when they file.

Who Files & Form 1099-K Thresholds

The table below shows when you must file Form 1099-K, based on how the payment was settled.

Type of filer Federal filing trigger Key takeaway
Online platforms / TPSOs (third-party network transactions) File only when BOTH are true for the calendar year: gross payments exceed $20,000, and transactions exceed 200 (for payments for goods or services). Use the calendar year total. Note: States may set lower thresholds. The old federal “$600” rule is not the current TPSO threshold.
Card processors/merchant acquirers (payment card transactions—Visa®, Mastercard®, etc.) No federal minimum threshold. Payment card transactions can be reportable for any amount. Even one card payment can mean a 1099-K is required for that payee.
Backup withholding cases (TPSO) If you withheld backup withholding for a payee, you must file Form 1099-K (and Form 945) even if the payee is below the normal TPSO threshold. The withholding requirement makes reporting mandatory. Backup withholding is generally 24% when it applies.

Note: The filer is usually the Payment Settlement Entity (PSE)—the entity that actually settles the transaction and instructs the transfer of funds into the seller’s account (and in some cases, filers can designate another party by written agreement).

What Counts and What Does Not?

What to report on Form 1099-K (reportable payment transactions)

  • Payment card transactions: credit cards, debit cards, and stored-value cards (including gift cards)
  • Marketplace/payment app payouts for goods or services: money sellers receive for sales or services when you (as the PSE) settle the payment
  • Crypto-funded debit card purchases: if checkout runs through Visa/Mastercard (or other card rails), it’s still a payment card transaction and can be reportable on 1099-K

Important: Form 1099-K reports gross payments—before fees, refunds, shipping, credits, or other adjustments.

What not to report on Form 1099-K

  • Gifts and personal reimbursements that are not payments for goods or services
  • Direct bank transfers/ACH that are not settled through a payment card network or a third-party payment network
  • Off-platform cash tips (unless they run through the card/app payment flow you settle)

Tip: If your platform supports it, let users label transfers as personal vs. goods/services before payout. It can save you correction work in January.

When to File Form 1099-K

Form 1099-K is an annual filing based on the calendar year, which means that you file Forms 1099-K once a year. For 2026 filings (2025 payments), your key due dates are:

  • Furnish payee copies: Monday, February 2, 2026 (since January 31, 2026, falls on a Saturday)
  • File with the IRS: Monday, March 2, 2026, if filing on paper, or Tuesday, March 31, 2026, if e-filing

You need to report payments based on the transaction date—the IRS treats the dollar amount of each transaction as determined on the date of the transaction, not when funds settle.

Extensions

Form 8809 can extend your IRS filing deadline for Form 1099-K by 30 days. However, it does not extend the deadline to send payee copies. For recipient copies, there’s no automatic extension—you must request extra time by faxing Form 15397 by the original due date. If approved, you will be granted up to 30 extra days to provide the recipient statements.

Expert Tip: Run a mid-December check to flag payees close to your filing triggers (and any state thresholds).

Notes:

  • If a payee is missing a TIN, start 24% backup withholding when required. The IRS can also notify you that the TIN is incorrect (after you transmit with an incorrect TIN)—in that case, begin withholding on reportable payments made more than 30 business days after the notice (or sooner) and stop after you receive a certified Form W-9. When backup withholding is applied, you must file Form 1099-K (and Form 945) even if the payee doesn’t meet the normal TPSO threshold.
  • In case the payment processing setup changes mid-year, each PSE/processor reports only the transactions it settled. Align cut-off dates and data handoffs so the same payments aren’t reported twice—or missed entirely.

1099-K Instructions — Box-by-Box Filing Guide

These easy box-by-box instructions will help you file 1099-K more efficiently:

Box What to enter Where to find the data What to avoid
1a — Gross amount of payment transactions Total gross payments settled for the calendar year before fees, refunds, shipping, chargebacks, credits, or any adjustments (use the transaction date basis). Year-end gross/settlement report Reporting net after fees/refunds
Using settlement-date totals instead of transaction-date totals
1b — Card-not-present transactions Gross amount of transactions where the card wasn’t present (or the card number was keyed in), typically online/phone/catalog sales. Card-present vs card-not-present breakdown in your processor reports Leaving it blank when you have e-commerce/phone sales
Treating TPSO-only payouts as “card-not-present”
2 — Merchant category code (MCC) The 4-digit MCC used by the card industry (applies to payment card transactions—TPSOs generally don’t complete this). Underwriting/KYC, onboarding profile, or processor “MCC” field Using a generic “catch-all” code
Filling this box when you’re a TPSO and don’t use MCCs
3 — Number of payment transactions Total number of payment transactions processed for the year (exclude refund transactions). “Total transactions” count in your ledger/processor exports/API Counting refunds as transactions
Counting only “contactless” swipes/taps (it’s all payment transactions)
4 — Federal income tax withheld Backup withholding amount (when applicable). Your withholding report/payout ledger (and your 945 records) Entering $0 just to “fill the box”
Missing withholding you actually took
5a–5l — Monthly gross amounts Total amount of reportable transactions for each month of the calendar year. Monthly gross (“month-to-date” exports; monthly payout summaries) Leaving months blank when you have that month’s activity
Using net monthly totals
6–8 — State information Note: These boxes are mainly for state reporting/Combined Federal/State filing. They’re provided for your convenience and need not be completed for the IRS.

Box 6: state abbreviation
Box 7: state ID
Box 8: state income tax withheld (if any)

 State tax registration records; state withholding reports Skipping state details when your state requires a paper/CF/SF filing
Mixing two states in one line (keep each state separated)

Quick Workflow Using Tax1099

  • Export your year-end data
  • Paste it into the Tax1099 template
  • Utilize built-in checks, which flag blanks, invalid MCCs, and total mismatches
  • Fix errors and e-file 1099-K

Deadlines for Form 1099-K (2026 Filing Season)

You need to file your Forms 1099-K by these deadlines for 2025 payments:

Task 2025 tax-year deadline How Tax1099 helps
Furnish payee copy (Copy B) to sellers/payees Mon, Feb 2, 2026 (Jan 31 falls on a Saturday) Send recipient copies via secure e-delivery (no printing or postage).
File Copy A with the IRS (paper) Mon, Mar 2, 2026 (Feb 28 falls on a Saturday) Generate paper-ready files when you qualify for paper file.
File Copy A with the IRS (e-file) Tue, Mar 31, 2026 Upload your file (or use API) and track filing status end-to-end.
State filing Varies by state Supports Combined Fed/State when available and state e-file where supported.
Corrections File as soon as you find an error Create and transmit corrected 1099-Ks quickly (and re-deliver to payees).

10-return e-file rule: If you’re required to file 10 or more information returns in total during the year (aggregated across applicable return types), e-filing is mandatory unless you have an approved waiver.

Penalties at a Glance

Penalties are assessed per return or per payee statement, based on how late you correct or file it.

Situation Penalty (per return/statement) for 2026 filings What you should do
Correctly filed within 30 days after the due date $60 Fix it fast—this is the lowest tier.
Correctly filed more than 30 days late, but by Aug 1 $130 Costs jump after 30 days—don’t wait.
Filed after Aug 1 (or not filed / not corrected) $340 Treat this as “high-cost.” File/correct ASAP.
Intentional disregard $680 minimum (no maximum) Highest risk tier—avoid with clean data and on-time filing.
Incorrect or missing TIN Same tiered penalties above Wrong/missing TINs are explicitly penalty-triggering errors—validate early.

Important reminder: The IRS can assess separate penalties for filing a correct 1099-K with the IRS AND furnishing a correct payee copy on time. For example, missing 1,000 forms at the $340 tier can mean $340,000 in penalties—and that’s before any separate recipient-statement penalties.

Common Pitfalls and Quick Fixes

Here are some common errors to avoid and what to do instead:

Reporting net instead of gross

Quick fix: Form 1099-K is based on gross payments. Keep processing fees and refunds in your books, not on the form. If you filed net amounts, file a corrected 1099-K.

Personal payments treated as business sales

Quick fix: Use in-app labels so that “personal” transfers can be reviewed and corrected by December 31. That keeps non-business payments out of year-end reporting, and you get the correct reportable payment data.

Duplicate reporting

Quick fix: If more than one processor or entity handles payouts, you’ll need to set clear cut-off dates and label ownership so that only the PSE responsible for the payment reports the relevant transaction, and there is no double or missed reporting.

Missing backup withholding

Quick fix: If backup withholding is required (missing TIN), you need to start applying 24% of backup withholding and keep withholding till the payee gives a certified W-9.

Late filings

Quick fix: Use Tax1099 reminders and run a final review early enough to fix rejects, TIN issues, and missing fields before the due date.

Real-Life Scenarios

Here’s how Form 1099-K thresholds and boxes play out in day-to-day payouts:

Scenario Do you file Form 1099-K? What you report (if you file)
A marketplace seller (artist) receives $2,750 for goods or services Not automatically, federally. For TPSO payments, federal filing generally starts only when the payee is over $20,000 and has over 200 transactions for the calendar year. You may still have a state filing trigger. If you do end up filing (state rule or other trigger), report the gross amount in Box 1a and complete other applicable boxes.
A card processor settles $350 to a food truck Yes. Payment card transactions have no federal minimum threshold. Report $350 in Box 1a (and complete other applicable boxes, such as 1b, if relevant).
A roommate sends $900 marked personal (not goods or services) No. Personal transfers are not payments for goods or services. Do not include it on 1099-K when it is truly personal and not a sale.
A rideshare driver receives $200, and you withheld 24% backup withholding Yes. If you withheld federal tax, reporting is required even if the payee is below the normal TPSO threshold. Report $200 gross in Box 1a and the tax withheld in Box 4.
Crypto-funded debit card sales total $15,000, and the checkout runs on card rails Yes. If it runs as a payment card transaction, it is in scope for 1099-K reporting, and there is no minimum threshold. Report the gross card-settled amount in Box 1a (and other applicable boxes).

FAQs

1. Do small card payments need a form?

Yes. Payment card transactions have no federal minimum threshold, so even very small card payments can be reportable on Form 1099-K.

2. Is a 1099-NEC also required if PayPal settles contractor pay?

No. If you pay a contractor through a payment card or third-party network (like PayPal), that payment is generally reported on Form 1099-K by the payment settlement entity and is not reported on Form 1099-NEC by the business that paid the contractor.

3. How are refunds shown?

Refunds are not shown as a separate line item on Form 1099-K. Form 1099-K reports the gross dollar amount of reportable payment transactions in Box 1a (and monthly gross in Boxes 5a–5l) without reducing for refunds, credits, chargebacks, fees, shipping, or discounts. So refunds generally don’t appear on the form at all.

4. Can the payer mask the seller’s TIN on Copy B?

Yes. You may truncate the recipient’s TIN on payee statements (Copy B), typically showing only the last four digits. However, do not truncate the TIN on what you file with the IRS (Copy A).

5. What is the TPSO reporting threshold?

For TPSOs, the federal reporting threshold is gross payments exceeding $20,000 and more than 200 transactions for the calendar year. Do note that some states may have lower thresholds, and if there was backup withholding, you’ll need to file even below the threshold.

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