What IRS Form 1099-K (2022) Is For
IRS Form 1099-K (2022) reports total payments you received through credit cards, debit cards, payment apps, and online marketplaces during the calendar year. The Internal Revenue Service requires payment settlement entities, such as merchant banks and third-party settlement organizations, to report the gross amount of payment transactions processed for each participating payee. These reports help verify taxable income on your tax return. Although you don’t file this form yourself, business owners must use it to confirm that income and refund transactions align with their records when they file taxes for the applicable tax year.
When You’d Use IRS Form 1099-K (2022)
You receive Form 1099-K if you accept payments through payment cards or third-party network transactions that exceed the minimum threshold for reporting. Payment settlement entities must submit the form by January 31 of the following calendar year, with copies provided to both you and the IRS. If the reported information includes personal payments or incorrect amounts, contact the payment card processor or payment app immediately to request correction. For late or amended filings, business owners may need to adjust their tax forms using a corrected 1099-K or an amended return to report accurate income and business expenses.
Key Rules or Details for the 2022 Tax Year
- Payment card transactions: All credit and debit card payments are reportable, regardless of total amount or number of transactions. The payment settlement entity must report such payments to both you and the IRS.
- Third-party network transactions: For third-party settlement organizations like PayPal or Venmo, reporting is applied only if total payments exceeded $20,000 and more than 200 transactions occurred during the tax year.
- Personal payments exclusion: Payments between friends or family for personal items are not considered reportable income. Marking transactions correctly in payment apps prevents them from appearing on the form.
- Gross payments reporting: The form includes gross payments before any refunds, chargebacks, or business expenses, meaning the total amount of all transactions processed.
- Tax identification requirements: The payment settlement entity reports using your Social Security Number or Employer Identification Number to link payments to your tax return.
- De minimis payments: Transactions below the reporting threshold are excluded, but all taxable income must still be reported, even if no form is received.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Receive and review your form
Check your mail or email by the due date of January 31 for IRS Form 1099-K. Review the total amount shown under 'Total Reportable Payment Transactions'. Verify that your name, address, and identification numbers are correct.
Step 2: Compare the form to your records
Match the payments reported to your bank deposits, business ledgers, and online marketplace statements. Before filing taxes, make sure your own accounting accurately reflects refund transactions, service fees, or other adjustments.
Step 3: Identify and correct discrepancies
If your 1099-K includes payments for personal items, unrelated services, or transactions on different platforms, contact the payment settlement entity or payment card processor. Request corrected information before the next business day, if possible, to avoid filing with inaccurate data.
Step 4: Report on your tax return
Use the information reported to calculate gross receipts and deduct legitimate business expenses. Self-employed individuals report income from IRS Form 1099-K on Schedule C, while other income or personal sales may be shown on Schedule 1 for proper tax purposes.
Step 5: Keep documentation
Store copies of your 1099-K forms, related payment records, and communications with payment apps for at least three years. Keeping complete records helps verify reported payments and protects you if the Internal Revenue Service questions your filing.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Reporting total payments as net income: The form lists gross payments before deductions. Avoid this scenario by recording business expenses separately and reporting only taxable income on your tax return.
- Including personal payments as business income: Payment apps sometimes include personal transfers in total costs. Prevent this by properly labeling personal payments to exclude them from reported transactions.
- Ignoring payments below the reporting threshold: Even if no 1099-K is issued, you must still report all taxable income. Maintain accurate records of aggregate payments across all third-party settlement organizations.
- Using incorrect identification numbers: A mismatched Social Security Number or Employer Identification Number can cause processing delays. Ensure your details match the IRS records before accepting payments.
- Double-reporting across different platforms: When accepting payments from other third parties or online marketplaces, confirm that each payment settlement entity reported only its transactions. Review totals to avoid duplicate income reporting.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After you file taxes, the Internal Revenue Service automatically compares your tax return to the payment information reported by each payment settlement entity. If total payments or payment card transactions do not match your reported income, the IRS may issue a CP2000 notice proposing an adjustment. To avoid delays or penalties, respond promptly with bank statements or business records showing accurate totals. States may also compare 1099-K data for their own tax purposes, so verify that your forms and filings are consistent across federal and state returns during tax season.
FAQs
How does IRS Form 1099-K report third-party network transactions?
IRS Form 1099-K reports total reportable payment transactions from party network transactions processed by third-party settlement organizations. The form lists aggregate payments from each payment app or processor for verification.
What counts as a payment transaction on Form 1099-K?
Payment transactions include all electronic payments processed through payment cards, debit cards, or third-party payment networks. These reflect the gross amount of money received before business expenses.
How do I handle incorrect payment card information on my 1099-K?
If your payment card section displays incorrect totals or includes certain payments in error, please contact your payment card processor. Request a corrected form before filing to ensure accuracy.
What if my payment app includes personal payments on the 1099-K?
If a payment app includes personal payments, document those transactions and report adjustments on your tax forms. Always label personal transfers correctly within the app to prevent inclusion.
Who qualifies as a participating payee on Form 1099-K?
A participating payee is any person or business that accepts credit cards or receives money through third-party network transactions exceeding the reporting threshold during the calendar year.
How should I file taxes for income reported on Form 1099-K?
Use the income totals from IRS Form 1099-K when you file taxes. Report business income on Schedule C, deduct business expenses, and include other income as needed.
What if I sell through an online marketplace?
Sellers using an online marketplace must review payments reported by the third-party settlement organization. Even if transactions fall below the minimum threshold, all business income must still be reported accurately.
