Form 1099-K : Line by Line Instructions

Updated on February 2, 2022 - 10:30am by Admin, TaxBandits

The Form 1099-K is a member of the 1099 Series of IRS tax forms. This form is used by payment settlement entities. In addition to filing on time with the IRS, a copy of Form 1099-K must be distributed to recipients. This is an overview of Form 1099-K Instructions and its deadlines for tax year 2021.

In this Article, We cover the following Details about 1099-K Filing Requirements

1. What is the purpose of IRS Form 1099-K?

The Form 1099-K is used by payment settlement entities and electronic payment facilitators to report payment card and third party network transactions. A payment settlement entity is an entity that makes payments in settlement of credit card transactions. The Form 1099-K is designed in a way that these businesses can report the payments made during the tax year to the IRS.

Payee will receive a copy before the Form 1099-K deadline from the payment settlement entity if they have met the following processing activity guidelines.

  • The total amount of transactions is over $20,000 AND if the number of individual transactions are more than 200.

If the payee meets these criterias then they will receive a copy of 1099-K. In the other case, if the payee met all these conditions and has not received any 1099-K Copy, then they can consider contacting the processor to check whether they have prepared 1099-K for them or not.

2. Line by line Form 1099-K Instructions

Form 1099-K Instructions has a total of 8 boxes, here is a complete overview.

Before getting into the specific fields of Form 1099-K, you will need to enter the payee’s information (name, address, and TIN). You will also need to provide your name, address, and TIN.

2021 Form 1099-K
  • In Box 1a, enter the gross payment card/third party network transactions. This is the total dollar amount of total reportable payment transactions for the payee.
  • In Box 1b is reserved for the taxable amount of the distribution. 2021 Form 1099-K
  • In Box 2 enter the four digit merchant code that is used by the credit card industry to identify the payee. 2021 Form 1099-K
  • In Box 3, Enter the total number of transactions processed through the payment card or third party network. Do not include the refund transactions. 2021 Form 1099-K
  • In Box 4, enter any federal income tax withheld due to the backup withholding rules. Generally, the payer backup withhold if the payee did not submit the correct TIN or did not furnish the TIN.
  • In Box 5, in boxes 5a-5l, enter the gross amount of reportable payment transactions for each month of the calendar year.
  • In Box 6-8, you can enter applicable state information. In Box 6, enter the state. In Box 7, enter the filer's state identification number, and finally in Box 8, enter the state income tax withheld. 2021 Form 1099-NEC

3. Advantages of E-Filing Form 1099-K with TaxBandits

E-filing with TaxBandits is a great way to ensure easy and accurate filing for the 2021 tax year. TaxBandits offers time-saving features like bulk uploads to streamline your filing process and prepaid credits to help you file faster and at the lowest price. We also support Direct state filing for 51 states. Likewise, we postal mail the recipient copies on behalf of you.

Need a recipient copy solution? We offer both postal mailing and online access options! E-File your 1099-K Now & Avoid late filing penalties.

4. How to file Form 1099-K with TaxBandits?

While filing paper copies of 1099-K Form is an option, the IRS-prefered method is actually e-filing. E-Filing 1099-K forms is much more convenient and it improves the accuracy of your forms. The main reason that this is their preferred method is because the IRS is able to process the forms at a much faster rate and even provide instant status updates.

When e-filing with TaxBandits, you can complete your forms in minutes, following these simple steps:

  • Step 1 : Create an account with TaxBandits.
  • Step 2 : Enter the Filer Details
  • Step 3 : Enter Payee Information.
  • Step 4 : Review and transmit Form 1099-K
  • Step 5 : Send recipient copies by Postal mail or online access

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