Online retailers, time to review your IRS Form 1099-K!
Continuing with IRS Form 1099-K, used for reporting credit card and online payment transactions.
What is form IRS 1099-K?
Form 1099-K 'Payment Card and Third Party Network Transactions' is an IRS information return used to report payment transactions to improve voluntary tax compliance. It requires credit card companies, and third party processors such as PayPal and Amazon to report the payment transactions they process on behalf of retailers. You will receive Form 1099-K from each payment settlement entity from which you have received payments in the settlement of payment transactions. The Form 1099-K gives you information about the gross amount of the payment transactions that needs to be reported.
Who needs an IRS 1099-K form?
Every retailer who accepts online accept credit card payments will receive Form 1099-K at the end of the year, if the sales volume through credit card companies is over $600/year, or if the volume of transactions through third party processors is more than 200 individual transactions and is the equivalent of $20,000.
The Payment Settlement Entity must also file an IRS 1099-K for payments made outside U.S. to an offshore account when the participating payee has the residential address or correspondence address of U.S. or participating payee’s submits payment in U.S. dollar.
Is IRS 1099-K accompanied by another form?
The 1099-K form must be filed with IRS form 1096. Many companies still produce a 1099-MISC form that was used before the implementation of the 1099 K. You should keep detailed records so you can deduct any payments that may also have been reported on the 1099-MISC.
Report your 1099-K payments on Schedule C on a separate revenue line. You can check you total business income by comparing the total revenue on Schedule C to your profit and loss statement from your own accounting system.
When is IRS 1099-K due?
You should receive copies of the IRS 1099-K by the end of January and they should be filed with the IRS by the end of February.
How do I fill out IRS 1099-K?
In the form, you need to provide payer’s information, business’s tax identification number, recipient’s identification number and its basic information. For more information on filling out the 1099-K and it's relationship to the 1099-MISC, check out the following video.
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