Published: | Last Updated: November 26, 2024
I received a Form 1099-K
UPDATE 11/25/2024: IRS issues revised Form 1099-K reporting guidance for 2024. Read the IRS’s news release for more details.
As part of the American Rescue Plan Act of 2021, the Form 1099-K reporting threshold for payments made by third party settlement organizations (TPSOs) decreased to payments exceeding $600. Previously, TPSOs were only required to report transactions on Form 1099-K, Payment Card and Third Party Network Transactions, for payees who received more than $20,000 and had 200 or more transactions.
There is no change to the taxability of income; the only change is to the reporting rules for Form 1099-K by TPSOs. Like before, income from part-time work, side jobs, or the sale of goods or services is still generally taxable.
Taxpayers must report all income on their tax return unless it is excluded by law, whether they receive a Form 1099-NEC, Nonemployee Compensation; Form 1099-K; or any other information return.
A Form 1099-K reports the gross amount of payments from credit cards, digital payments via TPSOs, and freelance platforms that manage payments between two parties. A separate Form 1099-K is issued by each payor.
If you had a side gig or online shop or sold items through an online marketplace and received a Form 1099-K, you must file a tax return if any of the following apply:
As of tax year 2023, TPSOs will issue a Form 1099-K to all people who receive payments of more than $600 for “goods and services” sold. However, if you are selling used items and sold the items for less than their original purchase price, see What should I do? How should I report the sale of personal property reported on Form 1099-K?
In most instances, the answer is yes. An individual whose net income is $400 or more is subject to self-employment tax and federal income tax, and you will need to file a Schedule SE with your tax return. For more information on self-employment tax, see Self-Employed Individual Tax Center.
Self-employment tax does not apply to the sale of personal items reported on Schedule D, Capital Gains and Losses. Read more on Self-Employment taxes here.
No, personal transactions between friends and family and gifts are not taxable and should not be reported on a Form 1099-K. Taxpayers can minimize the chance of errors by asking friends or family members to correctly designate personal transactions. The taxpayer should also make a note of the payment’s purpose and the sender.
You should report the income from Form 1099-K payments on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income, Schedule C, D, E, or F, depending on the nature of the income.
The gain or loss from personal property is generally the difference between the amount for which you purchased the item and the sales price. A gain on the sale of personal property is taxable and will be reported on Form 8949, Sales and Other Dispositions of Capital Assets, and Form 1040, U.S. Individual Income Tax Return, Schedule D, Capital Gains and Losses.
A loss is not deductible, but it still needs to be reported on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income. Determine if the gain or loss on the sale of a personal item used to compute my taxable income using the information on What to do with Form 1099-K.
You may have received a Form 1099-K in error for personal transactions, e.g., for transactions between friends and family or expense sharing.
If you receive a Form 1099-K in error or if the information on the form is wrong, contact the issuer of the Form 1099-K immediately. The issuer’s name appears in the upper left corner on the form along with its phone number. Taxpayers should keep a copy of all correspondence with the issuer for their records.
For more information, see Actions to take if a Form 1099-K is received in error or with incorrect information.
If you can’t get a corrected Form 1099-K, report the information on Schedule 1 (Form 1040), Additional Income and Adjustments to Income. For details, see Actions to take if a Form 1099-K is received in error or with incorrect information | Internal Revenue Service (irs.gov).
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Visit www.TaxpayerAdvocate.irs.gov or call 1-877-777-4778.
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