Form 1099-K just like the other variants of Form 1099 is used for reporting income. The 1099-K is used for reporting payment transactions for the year. A payment settlement entity where it made a payment in settlement of a reportable payment will use Form 1099-K to report income so the income can be reported on the federal income tax return.
These kinds of payments are also known as third-party network transactions or any other payment card transactions. If you’re operating an online business, your payment service provider is going to file this form so you can report income on your federal income tax return.
You will receive a Form 1099-K when the payments made to you is more than $20,000 with more than 200 individual transactions. However, certain limits apply. For example, the rest of Forms 1099 is issued if the payments made is over $600 during the course of the tax year. This applies to Form 1099-K too but only in certain situations. Learn more about the income limits for filing Form 1099-K.
Use Form 1099-K to File Tax Return
Without going in too further with the details, we can say that all Forms 1099 are used for reporting income. Form 1099-K is no exception to this, Whether the amount reported on Form 1099-K is as low as $600 or more than $20,000, it must be attached to your tax return.
If you’re filing a paper tax return, attach Form 1099-K in front of Form 1040. There is no specific order you need to staple Form 1099-K. If this is the main source of your income though, we recommend stapling it before all the other forms that report your income. For example, if you also received Form 1099-DIV for investments you made, attach it to Form 1040 behind Form 1099-K.
As for those who file electronically, you don’t necessarily need to do anything in particular. Simply, import your data to your tax return and everything will be handled from there by tax software. If the Form 1099-K is issued to you by a financial institution that works with a tax software like TurboTax, you can import your information without the need for acquiring Form 1099-K.