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 has provided you with an amount for gross receipts and also one or more Forms 1099-K, clarify with them if the gross receipts amount includes the 1099-Ks.
In ProWeb, if the taxpayer's business activity is being reported on Schedule C (Form 1040), create the Schedule C, then select:
- Income
-
Gross Receipts or Sales - Enter the gross receipts, including the amount from Form(s) 1099-K.
If desired, gross receipts can be itemized to help show the different sources. To itemize gross receipts, don't enter the gross receipts but instead click the blue button to the right of the amount field, enter a description of the source document, e.g., "1099-K from Uber", the amount from Box 1a, and select CONTINUE. To add a second source, select the plus link. The total of these entries will feed back to the return, and Schedule C will also include an attachment showing your entries.
If Form 1099-K Box 4 shows federal income tax withholding, that also needs to be entered in the return. From the Federal Section select:
- Payments & Estimates
- Other Federal Withholdings - Enter the amount in the "Federal withholding from Form 1099" field.
Note: This is a guide on entering a Form 1099-K into TaxSlayer ProWeb. This is not intended as tax advice.
Additional Information: