You may receive a 1099-K form 2022 if you have a business that accepts payments via debit or credit cards. The services you provide do not matter, whether it is ridesharing or selling items online. If you receive payments through a third party, it will send you the form which you will have to use in your tax return later.
Are you trying to find out what is Form 1099-K? In short, this form is some kind of a receipt you get from a third-party payment system if you use them in business. This is a tax form, and you need to provide the information from it in the tax return form.
The 1099-K tax form is widely used by third-party settlement organizations that transport payments from your clients to you. The IRS requires this data to make sure you don’t overpay or underpay your taxes. A bank may send this form to an online business owner.
The form is issued by third parties or, in brief, TPSO to business owners who accept payments by credit and debit cards. Consider the 1099-K reporting requirements:
- According to the new law released in 2021, you will receive the form if your sales are $600 and more. The change was made under the American Rescue Plan. It starts with January 2022 and does not impact the taxes from 2021;
- If the amount of money you receive via the 3rd parties is $20,000 and over;
- If there are more than 200 transactions from individuals made.
A copy of the form is sent to you by January 31. If you didn’t receive the form but know that you had to, you may contact the third party that provided the services. If it does not help, contact the IRS. Include the report’s numbers in Form 1040 Schedule C.
You don’t have to learn Form 1099-K instructions since you will receive the already filled document. However, you have to make sure that all the sections are completed in the right way. Here is the step-by-step guide to the form:
- The first block must contain the information about the filer, including the name, address with the ZIP code, and phone number.
- In the second and third blocks, there must be ticks in the right boxes with the information about the filer and the reported transactions.
- Indicate the name of the payee, address, and a phone number underneath;
- The account number must be included according to the IRS instructions.
- Include the filer’s and payee’s names in the appropriate boxes.
- The 1st A section has to contain the gross amount of transactions.
- 1 B section is made for the transactions without cards.
- The 2nd section is for the category code of the merchant.
- Note the number of payment transactions in section 3, and taxes withheld in section 4.
- Sections from 5a to 5l require information on taxes by month.
- The state must be indicated in section 6, and the state number — in section 7.
- Put a number of withheld state taxes in section 8.
If you are a business owner, you still have to know how to file a 1099-K form, since the information may be required by the IRS. The original form has several copies. Copy A must be sent to the IRS by the third party, Copy 1 is for the state tax department, and Copy B is for the payee. Copy C is left for the filer.
The information you receive must be provided in Schedule C of Form 1040 of your tax return. You should get it by January 31. However, you can prepare your tax return in advance, calculating your taxes before you receive the form. Once you get it, check the data in the document.
Once you learn how to fill out a 1099-K form, you will be able to provide your taxes to the IRS in no time. If you know more tricks related to the form, share them in the comments below. How long do you use this form? Is it your first time?
Based on article by https://pdfliner.com/