Form 1099-K Frequently Asked Questions: Individuals

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. No. Individuals and businesses should not receive a Form 1099-K, Payment Card and Third Party Network Transactions, for making a purchase.

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.