TaxBandits Knowledge Base

What is Form 1099-K?

The IRS Form 1099-K must be filed by the Payment Settlement Entity (PSE) for reporting the gross amount of reportable transactions made in the calendar year. The PSE includes any banks, organizations, or third-party settlement organizations that transfer funds or payments to the payee on behalf of the payee's client.

Who must file?

Every Payment Settlement Entity (PSE) must file 1099-K for each participating payee's reportable payment transactions. Reportable payment transactions include payment card transactions or third-party network transactions.
 
You must receive 1099-K if one of the following criteria is met:

• You received payments from payment card transactions such as debit, credit, or store-valued cards.
• You received gross payment exceeding $20000 for the past calendar year from the third-party payment network transactions history of more than 200.

Due Date

The deadline for the PSE to send the Form 1099-K to the payee is January 31 and for paper filing with IRS is February 28. If you e-file Form 1099-K, the deadline will be March 31. 

Form 1099-K Exemption

If the PSE has made settlement payments to the offshore accounts, other than the US, there is no need for filing Form 1099-K. Yet, there are some situations where the PSE has to submit this form for offshore payment transactions if at least one of the below conditions apply.

• The participating payee is said to have any US address.
• The PSE is being requested to transfer the settlement amount to the account inside the US.
• The PSE identifies the participating payee as a US resident.