Form 1099-K Frequently Asked Questions: Individuals

These updated FAQs were released to the public in Fact Sheet 2023-06PDF, March 22, 2023.

A. Form 1099-K, Payment Card and Third Party Network Transactions, is an information return. Use this information return in conjunction with your other tax records to determine your correct tax. To get further information on recordkeeping, check out Publication 583, Starting a Business and Keeping Records.

A. If you believe the information on Form 1099-K, Payment Card and Third Party Network Transactions, is incorrect, the form has been issued in error, or you have a question relating to the form, contact the filer, whose name and contact information appears in the upper left corner on the front of the form.

You may also contact the payment settlement entity whose name and phone number are shown in the lower left side of the form.

If you cannot get the form corrected, the error should be reported on Form 1040, Schedule 1, Additional Income and Adjustments to IncomePDF, Part I, Additional Income, Line 8z, Other Income, with an offsetting entry in Part II, Adjustments to Income, Line 24z, Other Adjustments.

For example, you took a trip with your friend and you paid for the airline tickets. If your friend reimburses you $2,500 for their airline tickets, and you received a Form 1099-K reporting the $2,500 as gross proceeds, your Schedule 1 should reflect the following:

Form 1040, Schedule 1, Additional Income and Adjustments to Income

Part I – Line 8z, Other income. List type and amount: “Form 1099-K Received in Error …. $2,500” to show the proceeds reported on the Form 1099-K.

and

Part II – Line 24z, Other adjustments. List type and amount: “Form 1099-K Received in Error…. $2,500” to offset the proceeds reported to you in error.

A. You may receive a Form 1099-K depending on the type of transactions.

If you accept payment cards (for example, credit card or debit cards) as a form of payment for goods you sell or services you provide, you will receive a Form 1099-K for the gross amount of the payments made to you through the use of a payment card during the calendar year. This reporting requirement has not changed, and there is no minimum reporting threshold for these payments to trigger a reporting requirement.

Further, for calendar years after 2021, if you accept payments from a third party settlement organization, you may receive Form 1099-K from that organization. A third party settlement organization connects the parties together (for example, an internet sales site). 

You will receive a Form 1099-K if you accepted payments from a third party settlement organization where,

  • the total number of your transactions exceeded 200, and
  • the aggregate amount of payments you received with respect to any participating payee exceeded $20,000 in the calendar year.

    Note: The American Rescue Plan Act lowered the threshold to trigger a reporting requirement on a Form 1099-K to from more than $20,000 to more than $600 (regardless of the number of transactions). The IRS issued Notice 2023-10, which temporary delays the enforcement of the lowered reporting requirement. However, you may receive a Form 1099-K in error at the lower threshold, despite Notice 2023-10.

A. You may report offsetting entries on Schedule 1, lines 8z and 24z for each Form 1099-K you received separately, or you may combine the Forms 1099-K received as follows:

  • One combined set of offsetting entries on Schedule 1 for all Forms 1099-K received reporting sales of personal items sold at a loss. Report the combined total of the proceeds on Schedule 1 – Line 8z – Other Income, using the description "Forms 1099-K Personal Items Sold at a Loss." Report the combined cost of the items, up to but not more than the proceeds of each item sold, on Line 24z – Other Adjustments, using the description "Forms 1099-K Personal Items Sold at a Loss."
  • One combined set of offsetting entries on Schedule 1 for all Forms 1099-K received in error. Report the combined amounts from Line 1a, Gross amount of payment card/third party network transactions, for the Forms 1099-K received in error on Schedule 1 – Line 8z – Other Income, using the description "Forms 1099-K Received in Error." Report the same amount reported on Line 8z on Line 24z – Other Adjustments, using the description "Forms 1099-K Received in Error."

A. Yes. For tax year 2022 you may use Schedule 1, line 8z to show both the gross proceeds and the offsetting negative amount to report a Form 1099-K received in error or report proceeds from the sale of a personal item at a loss as an alternative to reporting only gross proceeds on Schedule 1, line 8z with offsetting amounts on Schedule 1, line 24z.

Note: When reporting sales of personal items at a loss you may instead report the transaction(s) on Form 8949, Sales and Other Dispositions of Capital Assets, which carries to Schedule D, Capital Gains and Losses.

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