Form 1099-K, Payment Card and Third Party Network Transactions, is a form issued by financial institutions that process electronic payments such as credit and debit card transactions. Form 1099-K is sent to individuals that receive such payments by January 31st and it is considered part of the gross receipts of the taxpayer's business income.
Form 1099-K shows the gross amount of income that the taxpayer received from electronic payments such as credit cards, debit cards, and other third party payers in the operation of their business activity.
The income received on Form 1099-K should be included in the gross receipts of the taxpayer's business income:
- For a sole proprietor, Form 1099-K receipts are generally reported on Schedule C, but could potentially be reported on Schedule E or F.
- For a partnership or corporation the income is reported as part of the company's gross revenue.
If the taxpayer is filing a Schedule C (Form 1040), to enter gross receipts from Form 1099-K in TaxSlayer Pro create the Schedule C, then select:
- Gross Receipts or Sales - Include the amount from Form 1099-K in the total amount of gross receipts.
If desired, gross receipts can be itemized to help make it clear where the total comes from. To itemize gross receipts, press F10 and select New. Enter a description of the source document, e.g., "1099-K from Uber", the amount from Box 1a, and select OK. This step should be repeated if the taxpayer has multiple 1099-Ks as well as other sources of sales receipts.
If Form 1099-K reflects any federal income tax withholding in Box 4, from the Main Menu of the tax return select:
- Payments, Estimates & EIC
- Other Federal Withholdings [Form 1099] - answer Yes to the question "Is This Withholding From a 1099?" and enter the amount from Box 4.
Note: This is a guide on entering a Form 1099-K into the TaxSlayer Pro program. This is not intended as tax advice.