Taxpayers who have received payments via third-party payment processing platforms (such as PayPal, Stripe, Venmo, and CashApp) for selling goods or services might be surprised to receive a Form 1099-K in January.
We suggest reviewing the following information to make the Form 1099-K less taxing:
What is Form 1099-K?
Form 1099-K is issued to individuals and businesses to report income received via third-party payment processing platforms such as PayPal, Stripe, Venmo, and CashApp. This form ensures that income earned through these digital channels is accurately reported to the IRS. If you’ve been selling items or services online, this form might be relevant to you.
2024 Thresholds for Receiving a 1099-K
In 2024, the federal threshold for receiving a 1099-K is set at $5,000 in transactions for the year, regardless of the number of transactions you conduct. It’s important to note that, just because a payment is reported on a Form 1099-K, does not mean it’s taxable.
When to Expect Your 1099-K
You can expect to receive your 1099-K by January 31, 2025. This form might arrive via traditional mail or electronically, depending on your chosen delivery method with the payment platform.
Common Mistakes and How to Fix Them
Mistakes can happen, even with important forms like the 1099-K. Some common errors include incorrect amounts—where refunds or duplicate transactions may be overlooked—and inaccuracies in personal information, such as your name or Tax ID. Additionally, Form 1099-K should not report personal payments like gifts and reimbursements.
Steps to Correct Errors:
- Review Carefully: As soon as your 1099-K arrives, compare it with your transaction records to ensure all details are correct.
- Contact the Issuer: If you spot any discrepancies, reach out to the payment company that issued the form (at the top, left corner of the form). They are responsible for making necessary corrections.
- Maintain Documentation: Keep all supporting documents, such as transaction records, to substantiate your claims if needed.
Need Help?
We are here to help with any questions or concerns you might have. For further details and updates, you can also read this helpful article or visit the IRS official website.