Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report certain payments for goods or services made through payment cards and third-party settlement organizations (TPSOs), such as qualifying payment apps and online marketplaces. Payment settlement entities generally file Form 1099-K with the IRS and provide a copy to the participating payee.
We’re currently working our way through some of the essential information you need when reporting on Forms 1099. Today, we’re looking at Form 1099-K (Rev. January 2022), Payment Card and Third Party Network Transactions, diving into what the form is used for, and other useful tips!
If you haven’t already, make sure to read our related posts:
What you need to know about Form 1099-MISC
Your Guide to Form 1099-NEC
What is Form 1099-K?
Form 1099-K is used to report payment card and third-party network transactions, or. for payments made in settlement of reportable payment transactions for each calendar year. The form was introduced as a direct result of the 2006 tax year when it was reported that Americans underpaid $450 billion in taxes! This led the IRS to focus its efforts on collecting third-party reporting information more accurately.
Unlike the other Forms 1099, this form has five different copies. Copy A goes to the IRS, Copy 1 is for the State Tax Department, Copy B is for the payee, Copy 2 is to be filed with the recipient’s state income tax return when required, and Copy C is for the filer.
Who has to file Form 1099-K?
Forms 1099-K are used by payment settlement entities (PSE) for payments made in the settlement of reportable transactions. A PSE is considered as having made a payment to settle a reportable payment transaction if the PSE submits instructions to transfer the funds to the account of the participating payee in order to settle such reportable payment transaction.
A PSE is either a domestic or foreign entity that is a bank or other organization that is contractually required to make and settle payments with participating payees. A participating payee is any person who accepts a payment card, including gift cards, as payment or accepts payment from any third party settlement organization (TPSO) as settlement of a third party transaction.
Payments to settle payment cards accepted as payment by payee who is related to the issuer of the payment card should not be reported on this form.
| Payment type | Federal 1099-K threshold | Key point |
|---|---|---|
| Payment card transactions | No minimum threshold | Reportable regardless of payment amount |
| Third-party network transactions | Over $20,000 and more than 200 transactions | Both conditions generally must be met |
| Personal payments | Not reportable as payments for goods/services | Gifts and reimbursements generally shouldn’t appear |
| Payments below TPSO threshold | May still result in a 1099-K | A TPSO may report below the federal threshold |
Does receiving Form 1099-K mean the income is taxable?
Not necessarily. Receiving Form 1099-K does not by itself determine whether the reported amount is taxable income. Form 1099-K reports gross payments, while the tax treatment depends on what the payments were for. For example, payments for services may represent business income, while selling a personal item for less than you originally paid generally does not create taxable gain.
When is the Form due?
Form 1099-K is generally required to be furnished to recipients by January 31 following the reporting year. IRS filing deadlines depend on whether the return is filed on paper or electronically and may shift when a deadline falls on a weekend or legal holiday.
What are the penalties for missing the deadline?
If a business fails to file or furnish an accurate Form 1099-K by the required deadline, the penalty ranges from $60 for up to 30 days late, with a maximum penalty of $630,500 per year ($220,500 for small businesses) to $310 after August 1 or if not filed at all, with a maximum penalty of $3,783,000 per year ($1,261,000 for small businesses).
The IRS also charges interest on penalties, where the interest amount varies by the penalty type and amount.
To download and view the form and its instructions, use the links below:
Form 1099-K
Form 1099-K Instructions
Frequently Asked Questions
For third-party settlement organizations (TPSOs), Form 1099-K is generally required when payments for goods or services to a participating payee exceed $20,000 and the number of transactions exceeds 200 during the calendar year. Payment card transactions are subject to different rules and do not have the same federal minimum reporting threshold.
Not necessarily. Form 1099-K reports the gross amount of certain payment transactions, but receiving the form does not by itself determine whether the amount is taxable. The tax treatment depends on what the payments were for. For example, business payments may represent taxable income, while selling a personal item for less than its original purchase price generally does not create a taxable gain.
Personal payments that are not for goods or services generally should not be reported on Form 1099-K. Examples include gifts from friends or family and reimbursements for shared personal expenses, such as splitting the cost of a meal. Form 1099-K is intended to report qualifying payment transactions for goods and services.
Article Updated: 10/06/2026
