Form 1099-K FAQs: What to do if you receive a Form 1099-K

A1. You can use the Form 1099-K with your other tax records when it’s time to file your return. The Form 1099-K may include a combination of different kinds of total payments received.

The types of payments received determines where these payments are reported on your tax return and if you have a tax liability. For example, if you are getting paid as a ride share driver, you could report the payments as income on your Form 1040, Schedule C, Profit or Loss from Business (Sole Proprietorship) PDF. 

You will need to review the forms, determine if the amount is correct, and determine any deductible expenses using your tax records when you file your return because the Form 1099-K reports only gross payments.

The links below can help you determine proper reporting:

• If you sold a personal item
• If you sold goods, rented property or provided services

A2. Not necessarily. Just because a payment is reported on a Form 1099-K does not mean it is taxable. Also, just because a payment is not reported on a Form 1099-K does not mean it is not taxable. How you report Form 1099-K payment amounts on your tax return depends on the type of payments you received. More information is available to help taxpayers determine what their tax obligations are in connection with their Form 1099-K at Understanding your Form 1099-K:

• If you sold a used personal item
  For example, a taxpayer who sells a used personal item for less than they paid for it may receive a Form 1099-K, but the sale proceeds do not increase their taxable income because they didn’t make a profit, or gain. The IRS has guidance for how taxpayers can report this kind of payment on their tax returns.
   
• If you sold goods, rented property or provided services
  Whether you are in the trade or business of selling/renting property or providing services may determine the amount of the proceeds that are taxable. See Publication 535, Business Expenses.
   
• If you received a gift or received a reimbursement for a shared cost
  Payments of gifts and reimbursements for shared costs are not payments for goods or services and therefore are not reportable on Form 1099-K.

A3. You should contact the filer of the Form 1099-K. The contact information is generally in the upper left corner of the form. If a taxpayer does not recognize the filer shown in the upper left corner of the form, they should contact the payment settlement entity whose name and phone number are shown in the lower left corner of the form above their account number.

If you have general questions about the Form 1099-K, please consult the instructions for Form 1099-K PDF. If you have general questions about information returns, please consult the General Instructions for Certain Information Returns.

A4. If you believe the information on your Form 1099-K is incorrect, was issued in error, or you have a question relating to the form, contact the filer, whose name and contact information appears in the upper left corner on the form. If necessary, request a corrected Form 1099-K from the filer.

You may also contact the payment settlement entity (PSE) whose name and phone number are shown on the lower left corner of the form.

Keep a copy of the corrected Form 1099-K with your records, along with any correspondence you have with the filer or the PSE.

Don't contact the IRS. We can't correct your Form 1099-K.

If you can't get a corrected Form 1099-K, don’t wait to file your return. You can zero out the error when you file your return.

Report the amount on Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF.

Example: You receive a Form 1099-K for $11,000 your roommate sent you for their share of rent for the year.

Because the $11,000 is a reimbursement for your roommate’s share of rent, that amount is not taxable income to you because it is not income.

On Schedule 1 (Form 1040):

• Enter the error on Part I – Line 8z – Other income: "Form 1099-K received in error, $11,000"
• Adjust it on Part II – Line 24z – Other adjustments: "Form 1099-K received in error, $11,000"

These 2 entries note the error and result in a $0 net effect on your adjusted gross income (AGI).

A5. If you are a U.S. citizen or resident alien, the rules for filing income tax returns and making estimated tax payments are generally the same whether you are in the United States or abroad. You are generally subject to tax on worldwide income from all sources and must report all taxable income and pay taxes according to the Internal Revenue Code.

For further details, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad PDF.

It’s important to note that you must report all income on your tax return that you received during the year, regardless of whether you receive a Form 1099-K.

A6. The gross payment amounts received on the sale of a personal item (that is, an item that you own for personal use) might be required to be reported on a Form 1099-K. If you receive a Form 1099-K for the sale of a personal item, the information on the form will help you determine your gain or loss. Gain or loss on the sale of a personal item is generally the difference between the amount you paid for the item (the purchase price) and the amount you received when you sold it (the sales price).

For example, if you bought a refrigerator for $1,000 (the purchase price) and sold it for $700 (the sales price), you have a loss of $300. $700 sales price - $1,000 purchase price = $300 loss amount.

On the other hand, if you bought concert tickets for $500 (the purchase price) and sold them for $900 (the sales price), you have a gain of $400. $900 sales price - $500 purchase price = $400 gain amount.

The gain on the sale of a personal item is taxable. You must report the transaction (gain on sale) on Form 8949, Sales and Other Dispositions of Capital Assets PDF, and Form 1040, U.S. Individual Income Tax Return, Schedule D, Capital Gains and Losses PDF. See Publication 551, Basis of Assets, PDF for guidance in determining your basis.

The loss on the sale of a personal item is not deductible. For 2022 and 2023 tax returns, if you receive a Form 1099-K for the sale of a personal item that resulted in a loss, you should make offsetting entries on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income, as follows:

Report your proceeds (the Form 1099-K amount) on Part I – Line 8z – Other Income, using the description “Form 1099-K Personal Item Sold at a Loss.”

Report your costs, up to but not more than the proceeds amount (the Form 1099-K amount), on Part II – Line 24z – Other Adjustments, using the description “Form 1099-K Personal Item Sold at a Loss.”

In the example of the refrigerator sale above, if you received a Form 1099-K for $700 for the refrigerator for which you originally paid $1,000, you should report the loss transaction as follows:

Form 1040, Schedule 1, Part I – Line 8z, Other Income. List type and amount: “Form 1099-K Personal Item Sold at a Loss….

$700” to show the proceeds from the sale reported on the Form 1099-K

and,

Form 1040, Schedule 1, Part II – Line 24z, Other Adjustments. List type and amount: “Form 1099-K Personal Item Sold at a Loss…. $700” to show the amount of the purchase price that offsets the reported proceeds. Do not report the $1,000 you paid for the refrigerator because the loss on the sale of a personal item is not deductible.

You can use Form 8949 and Schedule D to report the sale of a personal item at a loss instead of Schedule 1 if, for example, you have other transactions that require you to file Form 8949 and Schedule D anyway. Because the loss isn’t deductible, enter an adjustment when reporting the proceeds and basis of the personal item on Form 8949 as follows. Enter “L” in column (f) as the code explaining the loss is nondeductible. Then enter the amount of the nondeductible loss as a positive number in column (g). In the example of the refrigerator sale above, enter $700 in column (d) for the proceeds, $1,000 in column (e) for the cost or other basis, “L” in column (f), and $300 in column (g) as the amount of the adjustment. This will result in $0 as the gain or loss in column (h).

A7. A personal item is something you owned for personal use such as a car, refrigerator, furniture, stereo, jewelry, silverware, or concert tickets, etc.

If you do not remember the original purchase price, or basis, of the item sold, you can attempt to find or estimate it a few different ways.

You can contact the bank or credit card company used to purchase the item for copies of old statements.

You can contact the company or individual who sold the item to you. They may have records of the sale or other information to help determine the cost.

For more information on how to establish this basis, go to IRS.gov: Publication 551, Basis of Assets PDF.

Generally, you should keep accurate records for personal items you may sell. If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist.

A8. Each payment app or online marketplace has its own processes to determine the nature of payments, and you should review the policies of any apps or online marketplaces you use. Be sure to keep track of what you’ve been paid for goods and what you’ve been paid for services.

It’s important to ensure any money you send or receive is designated properly to avoid an erroneous Form 1099-K. This will help when it’s time to file your return.

A9. Many third-party ticket sales apps or online marketplaces track a person’s gross sales of tickets and will report the gross sales to the IRS and send the payment information to the payee on a Form 1099-K. Your Social Security number needs to be reported on the Form 1099-K. Failure to provide your Social Security number to the ticket sale app or online marketplace may result in backup withholding.

Backup withholding is tax that is deducted by a company (usually the payer) when the payee (usually the taxpayer):

• Has a missing or incorrect Taxpayer Identification Number (individual taxpayer identification number (ITIN) or Social Security number (SSN).
• Fails to show that they’re exempt from backup withholding, or
• The taxpayer’s name on file doesn’t match IRS or Social Security Administration records.

If the amount withheld was inaccurate, the payer has the option to refund the amount to the taxpayer before issuing the Form 1099-K or reduce future withholding if it is within the same calendar year. If the Form 1099-K has been issued, a taxpayer may potentially receive a refund or credit when they file their tax return.

If a taxpayer was subject to backup withholding, they should report the federal income tax withheld (shown on Form 1099-K, Box 4) when they file their tax return along with other tax information to ensure that they only pay what they owe.

For more information, see Backup withholding.

A10. Yes, an ITIN is acceptable for Form 1099-K reporting requirements.

If the number on file with the payment app or online marketplace is incorrect, please contact the filer to have it corrected so you are not subject to backup withholding. For more information on backup withholding, go to Backup withholding.

A11. You should use all the forms and your other records to determine your actual tax liability when you file your return.

See Understanding your Form 1099-K on how to report Form 1099-K payments.