If you got a Form 1099-K, understand why you received it. Then use the form and your other records to help figure and report your correct income on your tax return. Even if you don't get a Form 1099-K, if you received payments for goods, services or property, you must report your income. This includes payments you receive in cash, property, goods, digital assets or foreign sources or assets. Follow the steps on this page for Form 1099-K. On this page Check the information on the form Check your records Use Form 1099-K to help report your income If you get the form when you shouldn't have If the form has incorrect information If the gross amount should be shared Check the information on the form Make sure this information on the Form 1099-K is correct: Payee's Taxpayer Identification Number (TIN) The Payee TIN is the last 4 digits of your Social Security number, individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN) or employer identification number (EIN). If your name and TIN are on the Form 1099-K, but you report business income with Form 1120, 1120-S or 1065, you need to have Form 1099-K corrected. Gross payment amount (Box 1a) The gross payment amount shows the total value of payments you received through payment card and third party network transactions. The gross payment amount isn't adjusted for any: Fees Credits Refunds Shipping Cash equivalents Discounts These items are not taxable income. You can deduct them from the gross amount. Check your records. If the gross amount is incorrect, take these steps. Check your records Your records may include reports from payment apps or online marketplaces, payment card receipts or merchant statements. Use the records to: Confirm the gross payment amount is accurate. If it's not, take these steps. Check for expenses you can deduct from the gross amount (fees, credits, refunds, shipping, cash equivalents or discounts). Just because a payment is reported on Form 1099-K doesn't mean it's taxable. Good recordkeeping is important to support the income and deductible expenses you report on your tax return. Back to top Use Form 1099-K to help report your income How you report Form 1099-K payments on your tax return depends on the type of transactions you made: If you sold a personal item If you sold goods, rented property or provided services If you sold personal items You may get a Form 1099-K for personal items you sold through a payment app or online marketplace. A personal item is something you owned for personal use such as a car, refrigerator, furniture, stereo, jewelry or silverware, etc. How you report these payments on your tax return depends on whether you sold the item at a loss or a gain. If you sold a mix of personal items at a loss and a gain, report losses and gains separately. Personal items sold at a loss A loss on the sale of a personal item can't be deducted from your taxes. But you can zero out the reported gross income so you don't pay taxes on it. If you sold personal items at a loss, you have 2 options to report the loss: Report on Schedule 1 (Form 1040) You can report and then zero out the Form 1099-K gross payment amount on Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF. Example: You receive a Form 1099-K that includes the sale of your car online for $21,000, which is less than you paid for it. On Schedule 1 (Form 1040): Enter the Form 1099-K gross payment amount (Box 1a) on Part I – Line 8z – Other Income: "Form 1099-K Personal Item Sold at a Loss, $21,000" Offset the Form 1099-K gross payment amount (Box 1a) on Part II – Line 24z – Other Adjustments: "Form 1099-K Personal Item Sold at a Loss $21,000" These 2 entries result in a $0 net effect on your adjusted gross income (AGI). Report on Form 8949 You can also report the loss on Form 8949, Sales and Other Dispositions of Capital Assets, which carries to Schedule D, Capital Gains and Losses . Back to top Personal items sold at a gain If you made a profit or gain on the sale of a personal item, your profit is taxable. The profit is the difference between the amount you received for selling the item and the amount you originally paid for the item. If you receive a Form 1099-K for a personal item sold at a gain, figure and report the gain on both: Form 8949, Sales and other Dispositions of Capital Assets Schedule D (Form 1040), Capital Gains and Losses Back to top If you sell goods, rent property or provide services You may get a Form 1099-K if you received payments through payment cards, payment apps or online marketplaces. These transactions can include payments you received as a gig worker, freelancer or other independent contractor (self-employed). This may also include payments you received from selling items as a hobby. Report Form 1099-K payments and other income on your tax return You must report all income you receive on your tax return. This may include the gross payment amount on Form 1099-K and amounts on other reporting documents like Form 1099-NEC or Form 1099-MISC. It should also include amounts not reported on forms, such as payments you receive in cash, property, goods or digital assets. Here's where to report Form 1099-K payments on your tax return for goods and services you sold: Gig worker, freelancer, hobby seller and other self-employed – You're considered a sole proprietor and should report Form 1099-K payment information on – Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). Partnership – Use Schedule E, (Form 1040), Supplemental Income and Loss. Corporation – Use Form 1120, U.S. Corporation Income Tax Return or Form 1120-S, U.S. Income Tax Return for an S Corporation. Rental income may be reported on Schedule E or Schedule C. Back to top If you get a Form 1099-K when you shouldn't have You may get a Form 1099-K when you shouldn't have if it: Reports personal payments from family or friends like gifts or reimbursements Doesn't belong to you Duplicates a Form 1099-K you already received If this happens: Contact the issuer immediately – see "Filer" on the top left corner of Form 1099-K to find out the name and contact information of the issuer. Ask for a corrected Form 1099-K that shows a zero amount. Keep a copy of the original form and all correspondence with the issuer for your records. Don't wait to file your taxes. File even if you can't get a corrected Form 1099-K. Back to top If your Form 1099-K has incorrect information If the Payee Taxpayer Identification Number (TIN) or gross payment amount is incorrect: Request a corrected form from the issuer Request a corrected form from the issuer – see "Filer" on the top left corner of Form 1099-K to find the name and contact information of the issuer. If you don't recognize the issuer, contact the Payment Settlement Entity (PSE) identified on the bottom left corner of the form above your account number. Keep a copy of the corrected Form 1099-K with your records, along with any correspondence you have with the issuer or PSE. Don't contact the IRS. We can't correct your Form 1099-K. File your taxes even if you can't get a corrected form Don't wait to file your taxes. To file your tax return, take these steps: If the payee Taxpayer Identification Number (TIN) is incorrect Report payments from the Form 1099-K and any sources of income on the appropriate tax return you normally file. If the gross payment amount is incorrect Report the amount from your incorrect Form 1099-K on Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF, then note the error as shown in the example. Example: You receive Form 1099-K that includes $20,500 your family sent you for college tuition and books. On Schedule 1 (Form 1040): Enter the error on Part I – Line 8z – Other income: "Form 1099-K received in error, $20,500" Adjust it on Part II – Line 24z – Other adjustments: "Form 1099-K received in error, $20,500" These 2 entries note the error and result in a $0 net effect on your adjusted gross income (AGI). Back to top If the gross amount should be shared There are situations when the gross payment amount (Box 1a) on Form 1099-K may not belong just to you and may be shared with other parties. Here are common cases and what to do to account for your correct amount: Shared credit card terminal If you shared your credit card terminal with another person or business, your Form 1099-K will include payment card transactions that belong to them, plus your own payments. What to do: Where required, file and furnish the appropriate information return (for example, Form 1099-K or Form 1099-MISC) for each person or business with whom you shared a card terminal and include the total payment card transaction amount, plus any other income that belongs to the other person or business. Keep records of payments issued to each person or business sharing your terminal including shared terminal written agreements and cancelled checks. Business bought or sold If you bought or sold your business during the year, your Form 1099-K may include payments for transactions made before or after the sale. This can happen when the card terminal isn't updated with the new business owner's tax ID number and business name. What to do: Request a corrected Form 1099-K from the PSE or FILER on the form — its name and telephone number are on the form. Keep a copy of corrected Form(s) 1099-K with your records, along with the purchase or sales agreement that shows the timing of the ownership change. Business entity change A business entity or tax ID change can affect your Form 1099-K reporting. For example, if you converted from a sole proprietorship (Schedule C) to a partnership (Form 1065) and continued using the same card terminal, the amount shown on the Form 1099-K won't match with your new entity's tax return. What to do: Immediately notify your merchant acquirer of any change to the name and tax ID number that links the terminal to your current business structure. Keep records to support the correct income and deductions for both business entities. Cash back payments If you allow customers to get cash back when they use their debit cards, these payments will be reported on Form 1099-K. Generally, you wouldn't include cash back amounts as part of your gross receipts. You also wouldn't claim them as a business expense. What to do: Keep records of customer cash back activity during the year. Cash back activity isn't taxable income. Multiple sources of business income You might report multiple sources of income on more than one line of a return or on multiple returns or schedules. For example, you may operate a retail business as a sole proprietor and have rental income. You may accept payment cards for both businesses. If you process the payments on one terminal, your Form 1099-K would include gross payment amounts for both businesses. What to do: Use your books and records to report all gross receipts on the appropriate line or schedule. In this example, you report gross receipts from the retail business on Schedule C and amounts for rental activity in the rental income on Schedule E. Back to top Related Understanding your Form 1099-K Form 1099-K FAQs Recordkeeping Crowdfunding Hobby v. business Gig Economy Tax Center Self-Employed Tax Center Sole proprietorships Tax information for businesses
