P O W E R H O U S E A C C O U N T I N G – B L O G

Third-Party Payments (Form 1099-K):

Powerhouse Accounting Services, LLC

April 28, 2022

Do you sell on eBay, or do you own a business that accepts payments via credit cards, debit cards, or third-party networks such as PayPal? If you answered yes to any of these questions, then you will receive a form 1099-K.

What is the 1099-K?

Form 1099-K is used to report transactions made through payment settlement entities. For example, if you use a service (Venmo, PayPal, Stripe, Square, etc.) to process debit or credit card transactions, this is a payment settlement entity and the total amount of these transactions for the calendar year must be reported on the 1099-K form.

When is form 1099-k Issued?

Starting in 2022, the IRS will require reporting of payment transactions for good and services sold that meets or exceeds $600 in a calendar year regardless of the number of individual payments or transactions. This requirement is for payments of goods and services and does not apply to payments from friends and family.

Prior to 2022, you would receive a 1099-k form:

  • From payment card transactions (for example, debit, credit, or stored-value cards)
  • When the third-party service processed more than $20,000 worth of payments, and the service processed more than 200 individual payments/transactions.

Make sure to mark payments for services or products so that the third-party payment processor knows that it is a business transaction. In addition, make sure you are tracking the income vs expenses throughout the year, so you do not miss any deductions to offset the 1099-k form.

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