Form 1099-K – Payment Card and Third Party Network Transactions is a form issued by financial institutions that process electronic payments such as credit and debit card transactions. Form 1099-K is sent to individuals that receive such payments by January 31st and it is considered part of the gross receipts of the taxpayer’s business income. Form 1099-K shows the gross amount of income that the taxpayer received from electronic payments such as credit cards, debit cards, and other third party payers in the operation of their business activity. The income received on Form 1099-K should be included in the gross receipts of the taxpayer’s business income. For a sole proprietor, Form 1099-K receipts are reported on Schedule C. For a partnership or corporation the income is reported as part of the company’s gross revenue.
If the taxpayer is filing a Schedule C (Form 1040), the gross receipts from Form 1099-K are reported in Keystone Tax Solutions as follows:
From the Schedule C Edit Menu, select
Income,
Gross Receipts or Sales – Include the amount from Form 1099-K in the total amount of gross receipts. To itemize gross receipts, press F10 and select ‘New’. Enter a description of the source document such as ‘1099K from PayPal’ and the amount from Box 1a and select OK. This step should be repeated if the taxpayer has multiple 1099-K’s. Any other items of gross receipts or sales should also be itemized on the statement.
If Form 1099-K reflects any federal income tax withholding in Box 4, the amount is reported in Keystone Tax Solutions as follows:
From the Main Menu of Keystone Tax Solutions, select
Payments
Other Federal Withholdings
NOTE: This is a guide on entering a 1099-K into the Keystone Tax Solutions program. This is not intended as tax advice.