If you own a self-employment business, such as a contractor, Form 1099-K often appears among your tax return details. The 1099-k form is usable by various financial institutions processing electronic payments, for instance, credit and debit card transactions. The form comes to you by 31st January showing how much you just earned through various electronic transactions involving debit cards, credit cards, and other third-party payers.
If you are running a sole proprietorship business, then the receipt reports always come on the on-Schedule C form. However, this income tax does come as part of the company’s gross revenue for those in a partnership or cooperative business.
Do I have to Report 1099-K Income?
What is form 1099-k used for? Typically, business ethics and legal laws demand that keeping your books and records clean remains super essential. The form 1099-K reflects all your business’s taxable transactions. The 1099-k deductions are mainly to fulfill the needful act for voluntary tax compliance.
Note: Not all businesses will be required to fill in the 1099-k form. According to the IRS system, your business will receive the form only under the following conditions.
- Your business earning gross payments that exceeding $20,000
- Transactions being more than 200 for such huge payments
Form 1099-k from 2020 has not changed, at least for most financial processing. You can always see examples of 1099-k from download, i.e., 1099-K PayPal and Amazon 1099-K. See a typical example here.
Reporting 1099-k income on the tax return by following the Form 1099-k instructions 2020 remains relatively easy and accessible. Still, however, you might need fundamental guidelines to top up your knowledge.
How to Report 1099-K Income on Tax Return – Using schedule C
If you are filing a Schedule C, also known as Form 1040, How to report 1099-k income on a tax return in this instance is quite simple. Here is how you proceed.
In the TaxSlayer Pro, select:
Start from the Gross Receipts or Sales: Here, you must Include the total amount specified in Form 1099-K as the gross. A simple way to itemizing these gross receipts is by pressing F10 and selecting New.
If Form 1099-K reflects any federal income tax withholdings in Box 4, then here is how you enter it in TaxSlayer Pro.
Start by selecting Payments.
Always answer yes to the “Is This Withholding From 1099?” question, then enter the precise amount from Box 4.
NOTE: Do not take the above instructions to be your tax advisor. The guide is only a helper guiding you on entering Form 1099-K into the TaxSlayer Pro program. You may want to look for more information regarding this on Form 1099-k instructions 2020. See the instructions here.
What should I do when I get the wrong total gross payment amount on Form 1099-K does send to me?
While this poses a rare case, it still does exist. According to IRS, there are many contributing reasons for this: sharing a credit card with someone. When such concerns arise, however, always contact the filler. These are the merchant or third-party transaction networks that sent you the document. Their details are always on the top left section of the 1099-k form.