Understanding Your Form 1099-K

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Form 1099-K is a report of payments you got during the year from:

  • Credit, debit or stored value cards such as gift cards (payment cards)
  • Payment apps or online marketplaces (third-party payment networks)

Third-party payment networks are required to file Form 1099-K with the IRS and provide a copy to you when the gross payment amount is more than $600. Form 1099-K should not report gifts or reimbursement of personal expenses you received from friends and family.

Use Form 1099-K with other tax records to help figure and report your taxable income when you file your taxes.

Form 1099-K, Payment Card and Third Party Network Transactions

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Who Sends Form 1099-K

Payment card companies, payment apps and online marketplaces are required to file Form 1099-K with the IRS. They also must send a copy of the form to taxpayers by January 31.

Who Gets Form 1099-K

You should get Form 1099-K for these situations:

If You Received Any Payments With Payment Cards

This includes credit cards, debit cards and stored value cards (gift cards).

If You Received Payments Over $600 With a Payment App or Online Marketplace

This includes payments for a personal item you sold or for goods you sell, services you provide or property you rent through any:

  • Peer-to-peer payment platform or digital wallet
  • Online marketplace (sale or resale of clothing, furniture and other items)
  • Craft or maker marketplace
  • Auction site
  • Car sharing or ride-hailing platform
  • Real estate marketplace
  • Ticket exchange or resale site
  • Crowdfunding platform
  • Freelance marketplace 

Gifts or reimbursement of personal expenses from friends and family should not be reported on Form 1099-K. They are not payments for goods or services.

$600 Reporting Threshold

Payment apps and online marketplaces are required to file a Form 1099-K if the gross payments to you for goods and services are over $600.

The $600 reporting threshold started with tax year 2023. There are no changes to what counts as income or how tax is calculated.

The reporting threshold for third party settlement organizations, including payment apps and online marketplaces, was lowered to $600 by the American Rescue Plan Act of 2021. Find more information on the change in reporting requirements.

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What Shouldn't Be Reported on Form 1099-K

Money you received from friends and family as a gift or reimbursement of a personal expense should not be reported on a Form 1099-K. For example: Sharing the cost of a car ride or meal, receiving money for birthday or holiday gifts or getting repaid by a roommate for a household bill. These payments aren't taxable income.

Be sure to note these types of payments as non-business when possible in the payment apps.

Take these steps if you receive a Form 1099-K in error.

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What to Do With Form 1099-K

Here's what to do if you receive a Form 1099-K:

Check the Information on the Form

Review the information on the Form 1099-K to make sure it's correct.

Take these steps if:

Review the Gross Payment Amount

The gross payment amount (Box 1a) on Form 1099-K reports the total payments you received. It doesn't include adjustments for fees, credits, refunds, shipping, cash equivalents or discounts. These items are not income. You can deduct them from the gross amount.

Compare the gross payment amount to your records. These may include reports from payment apps or online marketplaces, payment card receipts or merchant statements. Use the records to:

  • Confirm the gross payment amount is accurate
  • Check the gross amount for expenses you can deduct (fees, credits, refunds, shipping, refunds, etc.)

Good recordkeeping is important to support the income and deductible expenses you report on your tax return.

Use Form 1099-K to Help Report Your Income

Use Form 1099-K with your other tax records to help figure and report your correct income on your tax return.

How you report Form 1099-K payments on your tax return depends on the type of transactions you did:

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If You Sold a Personal Item

You may get a Form 1099-K if you received payments for a personal item you sold through a payment app or online marketplace.

A personal item is something you owned for personal use such as a car, refrigerator, furniture, stereo, jewelry or silverware, etc.

How you report these payments on your tax return depends on whether you sold the item at a loss or a gain. If you sold a mix of personal items at a loss and a gain, report them separately.

Personal Items Sold at a Loss

A loss on the sale of a personal item isn't deductible.

If you sold personal items at a loss, you have 2 options to report the loss:

Report on Schedule 1 (Form 1040)

You can report and offset the Form 1099-K gross payment amount on Schedule 1 (Form 1040), Additional Income and Adjustments to IncomePDF.

Example: You receive a Form 1099-K for selling your couch online for $700, which is less than you paid for it.

On Schedule 1 (Form 1040):

  • Enter the Form 1099-K gross payment amount (Box 1a) on Part I – Line 8z – Other Income: "Form 1099-K Personal Item Sold at a Loss, $700"
  • Offset the Form 1099-K gross payment amount (Box 1a) on Part II – Line 24z – Other Adjustments: "Form 1099-K Personal Item Sold at a Loss $700"

These 2 entries result in a $0 net effect on your adjusted gross income (AGI).

Report on Form 8949

You can also report the loss on Form 8949, Sales and Other Dispositions of Capital Assets, which carries to Schedule D, Capital Gains and Losses.

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Personal Items Sold at a Gain

A gain on the sale of a personal item is taxable.

If you receive a Form 1099-K for a personal item sold at a gain, report it on both:

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If You Sell Goods, Rent Property or Provide Services

You may get a Form 1099-K if you received payments through payment cards, payment apps or online marketplaces.

These transactions can include payments you received as a gig worker, freelancer or other independent contractor (self-employed). This may also include payments you received from selling items as a hobby.

Report Form 1099-K Payments and Other Income on Your Tax Return

You must report all income you receive on your tax return. This may include the gross payment amount shown on Form 1099-K and amounts on other reporting documents like Form 1099-NEC or Form 1099-MISC. It should also include amounts not reported on forms, such as payments you receive by cash or check.

Here's where to report Form 1099-K payments on your tax return for goods and services you sold:

Rental income may be reported on Schedule E or Schedule C, depending on your situation.

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If You Get a Form 1099-K in Error

You may get a Form 1099-K in error when the form:

  • Reports payments that were gifts or reimbursements from family or friends
  • Doesn't belong to you or is a duplicate

If this happens:

  • Contact the issuer immediately – see FILER on the top left corner of Form 1099-K
  • Keep a copy of the original form and all correspondence with the issuer for your records

Take these steps if you can't get a corrected Form 1099-K.

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If Your Form 1099-K Is Incorrect

Take the following steps if any of this information on the form is incorrect:

  • Payee Taxpayer Identification Number (TIN)
  • Gross amount of payment card/third party network transactions
  • Number of payment transactions
  • Merchant Category Code (MCC)

Request a corrected form from the issuer – see FILER on the top left corner of Form 1099-K. If you don't recognize the issuer, contact the Payment Settlement Entity (PSE) on the bottom left corner of the form above your account number.

Keep a copy of the corrected Form 1099-K with your records, along with any correspondence you have with the issuer or PSE.

Don't contact the IRS. We can't correct your Form 1099-K.

If You Can't Get a Corrected Form 1099-K

Report the amount on Schedule 1 (Form 1040), Additional Income and Adjustments to IncomePDF.

Example: You receive Form 1099-K for $650 your roommate sent you for their share of rent.

On Schedule 1 (Form 1040):

  • Enter the error on Part I – Line 8z – Other income: "Form 1099-K received in error, $650"
  • Adjust it on Part II – Line 24z – Other adjustments: "Form 1099-K received in error, $650"

These 2 entries note the error and result in a $0 net effect on your adjusted gross income (AGI).

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If the Gross Amount Doesn't Belong to You

There are situations when the gross payment amount (Box 1a) on Form 1099-K may not belong to you. Here are common cases and what to do to account for your correct amount:

If your name and Social Security number are on the Form 1099-K, but you report business income with Form 1120, 1120-S or 1065, you need to have Form 1099-K corrected.

What to do:

  • Contact the issuer on the Form 1099-K and ask them to send a corrected form with the business's EIN – see FILER on the top left corner of Form 1099-K.
  • Keep all correspondence with the issuer to show that the error was corrected.
  • Report the payments from the Form 1099-K and any other sources of income on the appropriate tax return.

If you shared your credit card terminal with another person or business, your Form 1099-K will include payment card transactions that belong to them, plus your own payments.

What to do:

  • Where required, file and furnish the appropriate information return (for example, Form 1099-K or Form 1099-MISC) for each person or business with whom you shared a card terminal and include the total payment card transaction amount, plus any other income that belongs to the other person or business.
  • Keep records of payments issued to each person or business sharing your terminal including shared terminal written agreements and cancelled checks.

If you bought or sold your business during the year, your Form 1099-K may include payments for transactions made before or after the sale. This can happen when the card terminal isn't updated with the new business owner's tax ID number and business name.

What to do:

  • Request a corrected Form 1099-K from the PSE or FILER on the form — its name and telephone number are on the form.
  • Keep a copy of corrected Form(s) 1099-K with your records, along with the purchase or sales agreement that shows the timing of the ownership change.

A business entity or tax ID change can affect your Form 1099-K reporting.

For example, if you converted from a sole proprietorship (Schedule C) to a partnership (Form 1065) and continued using the same card terminal, the amount shown on the Form 1099-K won't match with your new entity's tax return.

What to do:

  • Immediately notify your merchant acquirer of any change to the name and tax ID number that links the terminal to your current business structure.
  • Keep records to support the correct income and deductions for both business entities.

If you allow customers to get cash back when they use their debit cards, these payments will be reported on Form 1099-K. Generally, you wouldn't include cash back amounts as part of your gross receipts. You also wouldn't claim them as a business expense.

What to do:

Keep records of customer cash back activity during the year. Cash back activity isn't taxable income.

You might report multiple sources of income on more than one line of a return or on multiple returns or schedules.

For example, you may operate a retail business as a sole proprietor and have rental income. You may accept payment cards for both businesses. If you process the payments on one terminal, your Form 1099-K would include gross payment amounts for both businesses.

What to do:

  • Use your books and records to report all gross receipts on the appropriate line or schedule.
  • In this example, you report gross receipts from the retail business on Schedule C and amounts for rental activity in the rental income on Schedule E.

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Page Last Reviewed or Updated: 15-Aug-2023