Form 1099-K : Line by Line Instructions

Updated on September 07, 2023 - 10.00 AM by Admin, TaxBandits

Form 1099-K reports online payments made through payment cards and third-party network transactions during the year. This form consists of eight boxes, each requiring different information. Here, we provide you with a detailed, line-by-line breakdown for accurate reporting and compliance.

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

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

Form 1099-K is an IRS tax form used by Payment Settlement Entities (PSE) to report the online payments made through payment cards and third-party network transactions during the year. You will receive 1099-K Form from payment settlement entities at the end of the year if you have met the following conditions:

  • If you receive any payment through payment cards such as Debit cards, Credit Cards, and Stored value cards.
  • If you receive any payments through payment apps and online marketplace. The payment may include any personal item sold, renting property, renting cars, or providing services through the following platforms
    • Payment Apps like PayPal, Venmo, and Cash App
    • Auction sites
    • Craft and maker marketplace
    • Real estate marketplace
    • Freelance marketplace
    • Crowdfunding platform
    • Ticket exchange or resale site
    • Online marketplace to sell or resale personal items
    • Taxi and Car rental platform

2. What is the new threshold of Form 1099-K?

The IRS has reduced the reporting 1099-K threshold for the 2023 tax year. Previously, the threshold for reporting third-party network transactions on Form 1099-K was $20,000 with 200 transactions. However, for tax year 2023, the IRS has lowered the threshold to $600 or more without any transaction limits. This means that if you engage in third-party network transactions and receive payments totaling $600 or more, you will receive Form 1099-K from each payment settlement entity.

3. 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.

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. Form 1099-K Box 1b
  • In Box 2 enter the four digit merchant code that is used by the credit card industry to identify the payee. Form 1099-K Box 2
  • In Box 3, Enter the total number of transactions processed through the payment card or third party network. Do not include the refund transactions. Form 1099-K Box 3
  • 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. Form 1099-K

4. When is the deadline to file Form 1099-K for the 2023 Tax Year?

Here is the deadline to file Form 1099-K for the 2023 tax year.

Filing Type Due Date
Furnish Recipient Copy January 31, 2024
By IRS e-filing method April 01, 2024
By IRS paper filing method February 28, 2024

Get Started Today with TaxBandits to File Form 1099-K before the deadline to avoid late filing penalties.

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

File Form 1099-K online with TaxBandits offers numerous advantages for a streamlined filing experience. Notably, it provides time-saving features like bulk uploads for efficient multi-form submission and prepaid credits to optimize cost-effectiveness. The platform supports direct state filing across all 51 states, simplifying state compliance. TaxBandits also offers flexible delivery options, allowing you to choose between postal mail or electronic delivery for recipient copies. Additionally, you can effortlessly manage vendor W-9 information for accurate filing, and the TIN matching feature ensures data precision, reducing errors and ensuring IRS compliance.

Learn more about how TaxBandits can streamline your 1099-K filing.

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

E-filing your Form 1099-K is a quick and straightforward process with TaxBandits. Follow these simple steps:

  • Step 1 : Create an account with TaxBandits.
  • Step 2 : Enter the required information.
  • Step 3 : Review and transmit Form 1099-K to the IRS.

TaxBandits will handle recipient copy distribution for you. We provide both postal mail and e-delivery options for delivering recipient copies on time.

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