Form 1099-K might appear to be an infrequently used form, but it’s a surprisingly common process for companies working in monetary transactions. Also known as the Payment Card and Third-Party Network Transactions form, 1099-K is used primarily by credit card companies and third-party processors, like Amazon and PayPal. The form reports payment transactions processed for retailers or other third parties.
Who Files Form 1099-K?
Credit card companies and third-party processers are responsible for preparing and distributing Form 1099-K. This form must be prepared for every individual who received payments from payment card transactions, like debit, credit, or stored-value cards. Additionally, individuals who received payments in settlement of third-party payment network transactions within the reporting thresholds must receive a form. The reporting thresholds for 1099-K are:
- Gross payments that exceed $20,000, and
- More than 200 such transactions
The IRS form is itself easy to navigate. Preparers must simply include personal identification information and the amount of payment transactions for each month of the calendar year.
1099-K vs 1099-MISC
While the 1099-K may sound straightforward, recent changes to self-employment practices may complicate the process. Many confuse Form 1099-K with 1099-MISC, a more common and widely used form. In simple terms, contractors, consultants, and freelancers who make over $600 should expect to receive a 1099-MISC, but those who work in the gig economy, typically through an app, need a 1099-K.
For example, if you work for a company like Uber or Lyft, which processes payments through a third-party system, you will need to send out 1099-K forms. This will report the gross amount of transactions, which includes company fees, commissions, safe rider fees, and other forms of payment. If you do accounting work for a company that does not process its own payments – most other companies that utilize contract work—1099-MISC is sufficient.
How AMS Software Tool can Help
If you are tasked with preparing and distributing 1099-K forms, you’re likely dealing with hundreds at a time. This puts manual preparation out of reach, which means you’ll need a software tool. We think our W-2 and 1099 Software is the best product for the job. The platform includes intuitive, menu-driven performance and modular solutions for a huge range of payroll, filing, and accounting services. Users can easily import and transfer data from nearly any filing format, which reduces errors, increases data entry efficiency, and soothes your headache. You can also print data on preprinted forms for easy 1099-K distribution and report data within the software.
The best way to see our powerful software in action is to download a free demo. We believe this will be enough to convince you that 1099-K filing doesn’t have to be tedious, but if you have additional questions, contact our Sales and Information team at 800-536-1099. If you’re interested in purchasing any of our additional tools, see below for the full catalogue.