As with all IRS forms, IRS Form 1099-K is an important part of year end filing. This form type is used by payment settlement entities (PSEs) for certain types of payments made during the tax year.
What is Form 1099-K?
Form 1099-K, Payment Card and Third Party Network Transactions, is a form that reports payments made in settlement of reportable payment transactions during the year.
Who must file?
A Form 1099-K filing must be completed by all Payment Settlement Entities. PSEs must complete a form for all participating payee’s reportable transactions, such as payment card transactions and third party network transactions.
What is a Payment Settlement Entity?
A payment settlement entity (PSE) is an entity that is a merchant acquiring entity, such as a bank or other organization with a contractual obligation to settle certain transactions. This can also be a third party settlement organization (TPSO), which is a central organization that is contractually obligated to make payments to participating payees of third party network transactions.
What information is needed to file?
The information required to complete a Form 1099-K is as follows:
- Filer’s information
- Name, TIN, address
- Payee’s information
- Name, TIN, address
- Payment information
- Gross amount of transactions
- Card Not Present transaction amount
- Merchant category code
- Number of transactions
- Federal withholding amounts
- Monthly payment amounts
- State information (if applicable)
- State, State ID, State tax withheld
What are the deadlines?
The deadlines for Form 1099-K filings are traditionally as follows:
- Recipient Copy Deadline – January 31st
- Paper Filing Deadline – February 28th
- Electronic Filing Deadline – March 31st
Recent Changes
The reporting requirement threshold amount has recently changed from $20,000 to only $600, regardless of number of transactions. This change is in effect for all returns for calendar years beginning after December 31, 2022.
The Form 1099-K and instructions, along with other Forms 1099, have switched to a continuous-use format. They will now only be updated as needed.
Conclusion
Form 1099-K is an important part of the tax filing season for many filers. This is even more prevalent given the recent reporting requirement threshold change. Due to this, it’s important for filers to stay up-to-date on the latest tax news to ensure that they’re staying tax compliant.
An essential part of tax compliance when filing 1099 forms is completing the transmittal form. You can learn more about the transmittal form, Form 1096, by downloading our PDF Guide below:
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.
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