Form 1099-K, Payment Card and Third-Party Network Transactions is an IRS information return used to report transactions made via payment settlement entities. If a business accepts payments via credit card, debit card and third-party payment networks like PayPal, they will receive a Form 1099-K for the year. For 2021 and prior years, each payment settlement entity was required to send a Form 1099-K to the recipient by January 31st if the business received over $20,000 in gross payments and had over 200 separate transactions in a calendar year.
As of January 1, 2022, the threshold has been significantly decreased to $600 and there is no minimum transaction requirement. In addition to the payment settlement entities, all third-party peer-to-peer payment apps, including Zelle and Venmo are also required to issue Form 1099-K. As a result of this change, many businesses will receive multiple Forms 1099-K for the calendar year 2022. The IRS has pushed for this change to improve the accuracy of reporting and overall tax transparency.
For more information, contact Vedha Krishnamoorthy, CPA, FCA, Manager, Small Business Department, Tronconi Segarra & Associates LLP. She may be reached at firstname.lastname@example.org or 716.633.1373.