What Form 1099-K (2015) Is For
IRS Form 1099-K (2015) reports payments received through payment cards and third-party network transactions. It is issued by a payment settlement entity or third-party settlement organization to individuals, small businesses, and independent contractors who receive payments for goods or services during the 2015 tax year. This form helps the IRS verify that all income processed through these platforms is accurately reported.
The form shows the total amount of gross payment transactions before refunds, chargebacks, or processing fees. The amount listed is not the taxpayer’s taxable income but the total payments processed through credit card companies, payment apps, or online marketplaces. Taxpayers use this form to compare their records with IRS data when preparing their federal return.
When You’d Use Form 1099-K
Taxpayers typically receive Form 1099-K by February 1 of the year following the tax year in which the transactions occurred. For the 2015 calendar year, payment settlement entities and third-party payment processors were required to issue it by February 1, 2016. The form is filed by the payment processor, not the taxpayer; however, recipients should retain it for their records.
If the information is incorrect, the taxpayer must contact the payment settlement entity for a corrected version. If the corrected form affects reported income, Form 1040-X may be required to amend the federal return. Businesses and independent contractors use Form 1099-K to reconcile payments with their records. Individuals selling personal items at a loss, such as used furniture, generally do not need to report these payments as taxable income.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Key Rules or Details for 2015
For the 2015 tax year, the IRS required a payment settlement entity or third-party settlement organization to issue Form 1099-K when both the reporting threshold of more than 200 transactions and a total amount of over $20,000 in gross payments were met. All payment card transactions processed by credit card companies or payment apps were required to be reported, regardless of the transaction amount. These rules applied to small businesses, independent contractors, and online marketplaces that accepted payments for goods or services.
Form 1099-K reporting covered gross payment transactions for the entire calendar year before any refunds, fees, or adjustments. Selling personal items at a loss, such as used furniture, was generally not considered taxable income. Taxpayers should review the form carefully to ensure that all payments reported match other records before filing their federal return.
Step-by-Step (High Level)
Taxpayers do not file Form 1099-K themselves; however, they must ensure its accuracy and use it to report income correctly on their federal tax return.
Step 1: Verify Receipt and Accuracy
Confirm that the taxpayer received Form 1099-K from the payment settlement entity by the last day of January. Review that the filer and payee information is correct and that the total amount of payment transactions matches business records.
Step 2: Match Against Business Records
Compare the form’s total payments with accounting statements or other records to ensure accuracy. The reported income should reflect the total amount before any refunds, adjustments, or repayment amounts are deducted.
Step 3: Calculate Actual Net Income
Determine actual taxable income by subtracting business costs such as processing fees, refunds, or chargebacks from the gross total shown on the form. This process helps identify accurate income subject to federal taxes.
Step 4: Report Income on the Tax Return
Include payments from Form 1099-K when reporting income on the tax return. Small businesses and independent contractors should file Form Schedule C or other applicable forms to report income paid for goods or services.
Step 5: Maintain Supporting Documentation
Keep detailed records for at least three years, including payment processor statements, refund logs, and receipts. These records support income verification if the IRS reviews or requests additional information related to Form 1099-K reporting.
Common Mistakes and How to Avoid Them
Taxpayers often make reporting errors related to Form 1099-K, which can result in inaccurate income reporting and lead to IRS notices. Common mistakes and solutions include:
- Reporting gross payments as taxable income: The total shown on Form 1099-K reflects gross receipts, not net earnings. Deduct fees, refunds, and business expenses before calculating taxable income.
- Mixing personal and business transactions: Using a single payment app for both individual and business activities can create confusion. Maintaining separate accounts ensures accurate reporting.
- Failing to combine multiple forms: If you receive numerous Forms 1099-K from different payment apps or processors, total all amounts to determine your correct gross receipts.
- Double-counting “Card Not Present” transactions: These transactions are already included in the gross amount on the form and should not be reported separately.
- Ignoring errors on the form: If your form contains incorrect information, contact the payment settlement entity immediately to request a correction before filing your return.
Reviewing payment data carefully, maintaining separate records, and reconciling all Form 1099-K amounts help ensure accurate reporting and prevent IRS correspondence or penalties.
What Happens After You File
After the taxpayer files their return, the IRS uses data matching to compare reported income with Form 1099-K totals. If a discrepancy is found, the IRS may send a notice asking for an explanation. Differences often occur because Form 1099-K reflects gross payments, not net income after refunds or fees.
Providing documentation such as receipts, statements, and reconciliations helps resolve discrepancies. Failing to respond to IRS notices can result in penalties or interest. Payment settlement entities that file inaccurate forms or fail to issue required forms may also face penalties under federal law.
FAQs
I received a Form 1099-K, but I’m not a business—what should I do?
If the payments came from the sale of personal items or non-business transactions, they may not be taxable income. Review the total amount reported and contact the payment settlement entity to correct any errors before filing your federal return.
Why did I receive Form 1099-K from multiple payment apps or credit card companies?
Taxpayers who use multiple payment cards, online marketplaces, or third-party network transactions may receive more than one form. Combine all payments reported to determine accurate business income when completing your tax return for the applicable calendar year.
What is the reporting threshold for third-party network transactions in 2015?
For the 2015 tax year, Form 1099-K was required if the total payments exceeded $20,000 and the number of transactions exceeded 200. Lower amounts or fewer transactions generally were not subject to reporting requirements.
What should I do if Form 1099-K shows incorrect payment details?
If incorrect information was reported, taxpayers should contact the payment settlement entity or third-party settlement organization that issued the form. Request a corrected version and maintain records of all communications with the IRS for future reference.
How should I report payments from Form 1099-K on my federal return?
Include the income from Form 1099-K with other business payments when reporting to the IRS. Taxpayers should not report refunds or adjustments as taxable income. Review all records carefully before filing to ensure accuracy and completeness.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library or see our IRS assistance guide.
