A 1099-K is a variant of Form 1099 used to report payments received through reportable payment card transactions and/or settlement of third-party payment network transactions. It is a transaction record from third-party payment networks such as PayPal or Venmo. The purpose of the form is to ensure that individuals and businesses report all of their income for tax purposes. The form is sent out to payees by a payment settlement entity (such as a bank) if the gross payments exceed $600. Reportable payment card transactions do not include ATM withdrawals or checks issued in connection with a payment card. Examples of individuals who would receive Form 1099-K include freelancers compensated via PayPal, Etsy sellers, Uber drivers who accept credit cards as payment, small businesses who accept card transactions as payment, and in general professionals who accept online or credit card payments for services.

If you receive a Form 1099-K, it generally includes the gross amount of all reportable payment transactions from a payment processor. You can use it to calculate how much business income you received. 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. If your business is organized as a pass-through entity like a multi-member LLC, LLC electing to be treated as a corporation, S Corp or Partnership, you’ll need to report this information on your Form 1120, 1120S or 1065. Receiving a 1099-K doesn’t necessarily mean you owe taxes on that money. First, not all of the transactions on the form are taxable.