Form 1099-K Reporting (2024)

FAQs

Does 1099-K need to be reported? ›

Report Form 1099-K payments and other income on your tax return. You must report all income you receive on your tax return. This may include the gross payment amount on Form 1099-K and amounts on other reporting documents like Form 1099-NEC or Form 1099-MISC.

To report your income without a 1099-K, you'll need to keep track of your earnings from Upwork and any other sources of self-employment income. You can use your Upwork account statements, bank statements, invoices, receipts, or any other records that show how much you made and spent on your business.

Forms 1099 are information returns sent to you by an entity that paid you certain types of income throughout the tax year. Getting a Form 1099 doesn't necessarily mean you owe taxes on that income, but you will have to report the income to the IRS on your tax return.

1099 payments generally do not have federal income tax withheld, but you may be subject to backup withholding if you didn't provide your tax identification number when you set up your payment-processing account with the organization issuing the 1099-K.

Often, the IRS will recalculate your tax return by including the missing income and determining the amount of tax they think that you owe. This can include penalties and interest.

If you're a solopreneur or sole proprietor, your 1099-Ks count toward your self-employment income, which is subject to the self-employment tax. Record the information from your 1099-Ks as income on your Schedule C.

Although the Form 1099-K reporting threshold for 2023 is $20,000, companies could still send the form for totals over $600. No matter the amount, if you receive payments for selling goods or services or renting property you must report your income.

If the Form 1099-K is not correct, get a corrected Form 1099-K. If you don't report the taxable amount of the Form 1099-K payments, the IRS may send you a notice proposing to assess additional tax and may audit your tax return.

The new ”$600 rule”

Under the new rules set forth by the IRS, if you got paid more than $600 for the transaction of goods and services through third-party payment platforms, you will receive a 1099-K for reporting the income.

Receiving a 1099-K doesn't necessarily mean you owe taxes on that money. First, not all of the transactions on your 1099-K may be business-related. (The amount could include your roommate reimbursing you for groceries, for example.) Second, you might have tax deductions that could offset some of your business income.

Do I have to report 1099-K income from eBay sales? ›

Why do I need a Form 1099-K? For 2023, the IRS requires eBay and other online marketplaces to report total sales exceeding $20,000 and 200 transactions on Form 1099-K.

Items Sold at a Loss

A loss on the sale of personal items is not deductible. If you received a 1099-K for personal items sold at a loss, you are still required to report the 1099-K. However, you can offset the income for this sale.

Q. How to calculate self-employed income? Self-employed income is calculated by adding up all the income recorded on your 1099 forms. This includes 1099-NEC, 1099-MISC and 1099-K forms. The total earned income is then subject to the independent contractor tax rate of 15.3%.

If you're self-employed or work as an independent contractor, you typically report your income, including that from forms 1099-K, on Schedule C of your Form 1040, individual income tax return.

Generally, report this amount from Form 1099-MISC Miscellaneous Income, Box 3 on the Other Income line of Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 8.

You must also amend your tax return if you forgot to report a taxable 1099 income. You need to file an amended return before the filing due date to resolve a potential tax liability and avoid penalties. However, make sure that the IRS processed your original return before filing the amendment.

Whether you receive all of your 1099 forms or not, taxpayers must report the income when they file their taxes. Taxpayers do not need to send their 1099 forms to the IRS when filing but should report any errors on their 1099s.