Update on Form 1099-K
There has been some confusion with the what is included on the new Form 1099-K form and what belongs elsewhere. Here is an update for clarification on credit card payments that may be useful in your business tax preparation.
On the directions to Form 1099-MISC, the IRS has made it clear that payments made with a credit card or through any third-party payer, are not reported on Form 1099-MISC. The indicated amounts are now reported on Form 1099-K. As a result, if a business pays a service provider with a credit card, debit card, gift card, or electronically via a service, the payment is not included on a 1099-MISC.
Form 1099-K was added in 2011. The form is issued by a credit card company or other third party payer to payees if the payee has more than 200 transactions and more than $20,000 of gross income paid to them. The 1099-K is not issued by either the buyer or seller.
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