File 1099-K Online
Avalara 1099 & W-9 supports the efficient filing of many IRS form types, including the 1099-K for debit and credit card transactions from third party network payments. Get started filing your 1099-Ks now.
What is a 1099-K?
Unlike the 1099-NEC and the 1099-MISC which are used to report to the IRS compensation paid to vendors, freelancers, contractors, and agencies, the 1099-K is used to report to the IRS payments made through payment cards or third-party networks.
- Purpose: The 1099-K is for debit and credit card transactions from third party network payments.
- Who Should File: Among the most common use cases for the 1099-K are online marketplaces. In those instances, third party networks or payment settlement entities are required to file 1099-Ks with the IRS and deliver copies to their merchants.
- How to File: It’s possible to e-file 1099-Ks, which is often recommended over postal mail for the sake of efficiency and accuracy.
When is a 1099-K required?
A 1099-K is required for marketplace sellers when they meet a minimum threshold. That threshold has varied a lot in recent year, rising as high as $20,000 and sinking as low as $600. Marketplace sellers are not the only possible use case for the 1099-K. Additionally, a 1099-K may also apply to:
- Small businesses that accept credit card payments for their services
- Freelancers that use third party networks to receive payments from their clients
- More
Can I file a 1099-K online?
Yes, you can file a 1099-K with the IRS on their website or submit it via traditional postal mail. Avalara 1099 & W-9 customers can also e-file 1099-K forms directly with the IRS and automatically validate their 1099 recipients’ Taxpayer Identification Numbers (TINs) at the same time to catch errors and reduce the potential for future B-notices.
For step-by-step instructions to e-file, e-deliver, and correct erroneous information in 1099-K forms with Avalara 1099 & W-9, watch our video tutorial:
When is the deadline to file a 1099-K?
The deadline for a business to e-file a 1099-K with the IRS to report debit and credit card transactions from third party network payments for the previous year is March 31st. Businesses must also send a copy of the 1099-K to its recipient by January 31st to ensure that the recipient’s income is accounted for in their annual tax filings.
How do I file a 1099-K?
The following steps are best practices for filing a 1099-K with the IRS:
- Step 1: Obtain a W-9 from a merchant at the point of onboarding them, regardless of how much you expect them to sell over the course of the tax year.
- Step 2: Validate that the merchant’s legal name, address, and social security number in the W-9 are legible and accurate.
- Step 3: Obtain permission from the merchant to receive their 1099-K via email in January.
- Step 4: At the end of the tax year, fill out a 1099-K with information from the W-9.
- Step 5: Electronically file the 1099-K with the IRS before the annual March 31st deadline.
- Step 6: E-deliver copy B of the 1099-K to the merchant before the annual January 31st deadline. (Use postal mail for a recipient who did not initially opt in to electronic delivery and make sure it is postmarked before January 31st.)
- Step 7: Retain a copy of the 1099-K for your business records in a safe and secure repository.
- Step 8: Investigate unique state requirements for additional 1099-K filings.
Note: All of these steps for 1099-K compliance can be automated using Avalara 1099 & W-9, including the necessary collection of W-9s at the point of onboarding. This video tutorial explains how:
IRS Form 1099-K FAQs
These are some of the most common questions that Avalara receives about the 1099-K:
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What will the threshold for requiring a 1099-K be in January 2025?
The IRS delayed their own reduction in the 1099-K threshold until tax year 2024 but there could potentially be legislation that raises the threshold back to $10,000 or higher. It’s recommended that marketplaces check the latest rules with the IRS closer to the filing deadline.
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Am I required to file 1099-Ks electronically with the IRS?
If you are required to file 10 or more 1099-Ks with the IRS, you must e-file them rather than use postal mail unless you specifically request a waiver from the IRS.
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Do individual states have their own requirements for the 1099-K?
States that participate in the Combined Federal State Filing Program generally do not have their own unique requirements for the 1099-K. Other states may have unique requirements and that may include different filing deadlines and reporting thresholds.