1099-K Form (Payment Card and Third Party Network Transaction)

Purpose of Filing Form 1099-K

This is used to report payments received through reportable payment card transactions (such as debit, credit, or stored-value cards) and/or settlement of third-party payment network transactions. Form 1099-K is sent out to payees by a payment settlement entity (such as a bank) if there are more than 200 such transactions and the gross payments exceeds $20,000. Reportable payment card transactions do not include ATM withdrawals or checks issued in connection with a payment card.

What should be reported through 1099-K?

On 1099-K you are required to report the gross payments which often includes the amount sent to a payee before any processing or platform fees. Unlike Form 1099-MISC, the form 1099-K is sent to both individuals and corporations to report payments. For example, an LLC that elects to be treated as a C-Corporation would not be sent a 1099-MISC but 1099-K is sent depending on the payor's particular obligation.

Who must file Form 1099-K?

Every Payment Settlement Enttity (PSE) or other party which submits instructions to transfer funds to the acccount of a participating merchant, in settlement of reportable payment transactions, must file an information return with respect to each participating payee for that calendar year.

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