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Category: Other Tax Forms

1099-K Merchant: Card and Third Party Network Payments

INSTRUCTIONS FOR PAYEE

Merchant card and third party network payers, as payment settlement entities (PSE), must report the proceeds of payment card and third party network transactions made to you on Form 1099-K under Internal Revenue Code section 6050W. You have received this form because you have accepted merchant cards for payments, or because you received payments through a third party network that exceeded $20,000 in gross total reportable payment transactions and the total number of those transactions exceeded 200 for the calendar year. The PSE may have contracted with an electronic payment facilitator (EPF) or other third party payer (TPP) to make payments to you.

If you have questions about the amounts reported on this form, contact the FILER whose information is shown in the upper left corner on the front of this form. If you do not recognize the FILER shown in the upper left corner of the form, contact the PSE whose name and phone number are shown in the lower left corner of the form above your account number.

Account number: May show an account or other unique number the PSE assigned to distinguish your account.

Box 1: Shows the aggregate gross amount of merchant card/third party network payments made to you through the PSE during the tax year.

Boxes 5a–5l: This shows the gross amount of merchant card/third party network payments received by you for each month of the reporting calendar year. This amount is provided to assist you in the accurate
preparation of your fiscal year tax return.

A payment card is any card, including any stored-value card (having prepaid value, including gift cards), issued according to an agreement or arrangement that provides for all of the following:

• One or more issuers of the cards.

• A network of persons unrelated to each other, and to the issuer, who agree to accept the cards as payment.

• Standards and mechanisms for settling the transactions between the merchant acquiring entities and the persons who agree to accept the cards as payment.

A third party payment network is any agreement or arrangement that provides for the following:

• The establishment of accounts with a central organization by a substantial number of providers of goods or services who are unrelated to the organization and who have agreed to settle transactions for the provision of the goods or services to purchasers according to the terms of the agreement or arrangement.

• Standards and mechanisms for settling the transactions.

• Guarantee of payment to the persons providing goods or services (participating payees) in settlement of transactions with purchasers pursuant to the agreement or arrangement.

A third party payment network does not include any agreement or arrangement that provides for the issuance of payment cards.

For complete instructions for form 1099-K, click here.

 

To report your 1099-K earnings within your Schedule C (Profit or Loss from a Business) enter it into the Federal Section >> Income >> Enter Myself >> Profit or Loss From Business >> Schedule C >> Enter Myself >> (Complete the Information regarding Your Business) >> Income section >> Gross Income line.

To report your 1099-K earnings within the Schedule F (Profit or Loss from a Farm) enter it into the Federal Section >> Income >> Enter Myself >> Profit or Loss From Farming >> (Complete the Information Regarding Your Business) >> Enter on either Sales of Livestock or Sales of Products line.