Tax form guide · US · 2026
Form 1099-K: what to do when your business gets one
Card processors and payment apps send a 1099-K for the money they handled for you. You do not file it; you check it. What the boxes mean, why the total rarely matches your sales, and how to reconcile it.
Tax forms › Form 1099-K · Last reviewed October 25, 2026 · General information, not tax advice
Form 1099-K at a glance
| Who sends it | Card processors (payment settlement entities) and payment apps or marketplaces (third-party settlement organizations) |
|---|---|
| Card payments | Reported whatever the amount; there is no threshold |
| Payment apps and marketplaces | Over $20,000 and more than 200 transactions in the year (reinstated retroactively by the 2025 law) |
| Your 2026 copy | Due to you by Mon, Feb 1, 2027 |
| What you do | Reconcile it with your sales and report your actual income; you do not file the 1099-K |
What Form 1099-K is
Form 1099-K reports the gross payments a payment processor or platform settled for you during the year. The processor files it with the IRS and sends you a copy, so the IRS will compare it with the gross receipts on your return.
Box 1a is a gross figure. The IRS says it is not reduced for fees, credits, refunds, shipping, cash equivalents or discounts. Your own sales figures usually differ, and that is fine as long as you can show why.
For payment apps and marketplaces, the One, Big, Beautiful Bill reinstated the old threshold retroactively: a form is required only when payments to you exceed $20,000 and the number of transactions exceeds 200. The IRS notes you may still get one below the threshold. Card payments have no threshold.
Who has to file
- Any business that accepts credit or debit cards, whatever the volume.
- Businesses paid through payment apps or online marketplaces above $20,000 and 200 transactions for the year, or below that if the platform chooses to send one.
- You do not issue 1099-Ks. And payments you make by card or payment app are left off the 1099-NECs you send your own contractors, because the processor reports them here.
Due dates
| What | Due |
|---|---|
| Processor sends your 2026 Form 1099-K | By Mon, Feb 1, 2027 |
| Processor files with the IRS | Mon, Mar 1, 2027 on paper; Wed, Mar 31, 2027 electronically |
| You report the income | On your 2026 return: Schedule C, Form 1065, 1120 or 1120-S |
If a form has not arrived by mid-February, log in to the processor's dashboard; most post the form there.
Penalties for filing late or wrong
- There is no penalty for receiving a 1099-K. The risk is a mismatch: if your reported gross receipts are lower than your 1099-K totals and you cannot explain the difference, expect an IRS notice and possibly tax, interest and an accuracy-related penalty.
- If you never gave the processor a correct TIN, it may start backup withholding at 24% of your payouts.
Form 1099-K box by box
| Box | What it shows | How to check it against your books |
|---|---|---|
| Filer | The processor or platform that filed the form, and whether it is a payment settlement entity, an electronic payment facilitator or other third party | Match it to the merchant or platform account |
| Transaction type | Payment card or third-party network | Card sales and app sales are reconciled separately |
| Payee TIN | Your EIN or SSN | Must match your return; ask for a corrected form if wrong |
| 1a | Gross amount of payment transactions for the year | Gross card or app sales before fees and refunds, including any sales tax, tips or shipping you charged |
| 1b | Card-not-present transactions | Online and phone orders |
| 2 | Merchant category code | Information only |
| 3 | Number of payment transactions | The platform's transaction count |
| 4 | Federal income tax withheld (backup withholding) | Claim it on your return as tax paid |
| 5a to 5l | Gross amount for each month, January to December | Compare month by month with the deposits in your books |
| 6 to 8 | State, state ID and state tax withheld | Only where the state requires it |
Typical reasons your books show less than box 1a: processing fees taken before payout, refunds and chargebacks, sales tax collected for the state, tips passed to staff, personal payments run through a business account, and timing at year-end (a December 31 sale paid out in January).
Common mistakes
- Reporting only the net payouts that reached the bank. Report gross receipts, then deduct fees as an expense and refunds as returns.
- Counting the same sale twice: once from the 1099-K and again from your invoices.
- Ignoring a 1099-K because the total looks wrong. Ask the filer to correct it; the IRS cannot.
- Mixing personal and business payments in one app account.
- Leaving card or app payments to contractors on your own 1099-NECs.
How to file Form 1099-K
- Collect every 1099-K. Download the form from each processor, marketplace and payment app you used in 2026.
- Get the gross sales from your books. Run your sales for 2026 and separate card and app sales from cash, cheque and bank transfer sales.
- Reconcile month by month. Compare boxes 5a to 5l with each month's card deposits plus the fees and refunds taken out, and list the differences.
- Fix errors at the source. If the TIN or the amount is wrong, ask the filer named on the form for a corrected 1099-K and keep the correspondence.
- Report and keep records. Report your actual gross receipts on your return and keep the reconciliation with your year-end records.
How AcboBooks fills it in
AcboBooks 0.2.1 does not read or import Form 1099-K. It helps the reconciliation by recording card sales at their gross amount.
- Make Deposits has a "Less merchant fee" line: the gross sales come out of Undeposited Funds, the fee goes to an expense account, and the bank line matches the processor's payout.
- Receive Payment can record a bank fee on a customer payment the same way.
- Your income and sales reports then show gross sales, and the fee expense account shows what the processor kept: the two numbers you need to tie out box 1a.
What it leaves to you
- AcboBooks does not separate card sales from other sales automatically. A separate payment method or deposit account for card payouts makes the comparison easier.
Described as of AcboBooks 0.2.1. See deposits and reconciliation in AcboBooks
Questions
What is the 1099-K threshold for 2026?
For payment apps and online marketplaces, more than $20,000 in payments and more than 200 transactions in the year. For credit and debit card payments, there is no threshold: the processor reports any amount.
Do I have to file Form 1099-K?
No. The processor or platform files it. You use it to check your gross receipts and report your actual income on your return.
Why is my 1099-K higher than my sales?
Box 1a is gross. It is not reduced for fees, refunds, chargebacks, discounts or shipping, and it can include sales tax and tips. Those differences are fine if your records show them.
My 1099-K is wrong. What do I do?
Contact the filer shown on the form and ask for a corrected one. The IRS says it cannot correct a 1099-K. Keep the request and any reply with your records.
Do I include card payments on the 1099-NECs I send my contractors?
No. Payments you made by credit card, debit card or a payment app are reported by the processor on Form 1099-K. Leave them out of your 1099-NEC totals.
Sources
- IRS: Understanding your Form 1099-K
- IRS: What to do with Form 1099-K
- IRS: Form 1099-K frequently asked questions
- IRS IR-2025-107: Form 1099-K threshold reverts to $20,000 under the One, Big, Beautiful Bill
- IRS: About Form 1099-K
Checked against these sources on . Dates assume a calendar year and apply the next-business-day rule for weekends and holidays.
Related
- How to fill out Form 1099-NEC
- How to fill out Form 1099-MISC
- How to fill out Form 1096
- How to record credit card payments and fees
- Year-end closing checklist for 2026
- 1099-NEC vs 1099-MISC and the $2,000 threshold
- Year-end hub: every US and Canadian year-end form, deadline and checklist
- All tax form guides
General information, not tax or legal advice. Forms, thresholds and dates change; confirm with the IRS and SSA or a tax professional before you file.
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