Companies have until Monday, January 31st, 2018 to deliver 1099-Ks to recipients. Recipients may even receive it before then or a few weeks after in the case the company has an extension. Payable is the service working with Stripe Connect to deliver 1099 tax forms this year. We put together this quick guide to help you better understand your 1099-K and what it means for taxes.
From the IRS: Understanding Your 1099-K
There are over 15 different types of 1099 forms used by companies to report payments to individuals or other companies. This is one way the IRS knows how much in taxes it can expect come April. The 1099-K is used by Payment Settlement Entities or Third Party Payment Networks to report payments between two different vendors, companies, or individuals.
Individual 1099-K Recipients
Individuals receiving form 1099-K need to report those payments on income taxes. But they may be able to deduct expenses to lower the amount they need to pay taxes on. For example, if a contractor had marketing expenses, production expenses, or payments to subcontractors or any other expenses for a project, they may be able to deduct those expenses for tax purposes. The Schedule C is the form used to count individual income and expenses from a project. The IRS provides a list of deductions in the instructions to the Schedule C.
It’s highly recommended that you speak with a tax professional to understand your particular tax obligation as it can vary based on your project type and whether you are an incorporated business or individual.
You’ll receive a 1099-K via Payable if you earned over $20,000 and received over 200 payments from a company using Stripe Connect to make payments.
Yes, even if you didn’t receive a 1099-K for Kickstarter funds, you will need to report the funds you raised to the IRS.
Anyone who receives a 1099-K should check the form for accuracy and make sure the name, address, SSN or EIN are all correct. Recipients should also make sure the payment amounts reported are also correct, and talk with their tax accountant if there are questions regarding how to interpret the 1099-K.
For recipients with several successful projects on Kickstarter, Payable aggregates the funds raised across all projects and reports that amount on one 1099-K.
Don’t worry – the 1099-K is required to report the total amount paid out before fees were extracted.
Using Kickstarter as an example: The amount reported on each 1099-K includes the fees that Kickstarter takes out before the funds reach your bank account. When you report the funds raised on Kickstarter you’ll may be able to count the fees as earnings and an equal deduction. You should talk with your tax accountant if you have questions with what to report.
Here’s what the form will look like:
Payable, now a part of Stripe, generates and delivers 1099s for companies using Stripe Connect.
Payable is a platform for paying contractors and handling the related tax forms.
$0.99 per payment