Companies have until Monday, January 31st, 2017 to deliver your 1099-K. You 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 how 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
For individuals receiving form 1099-K, you need to report those payments on income taxes. But you are able to write off expenses to lower the amount you pay taxes on. For example, if you had marketing expenses, production expenses, or payments to subcontractors or any other expenses for your project, you can likely write those off. The Schedule C is the form used to count your individual income and expenses from your project. The IRS provides a helpful 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.
First, check the form for accuracy and make sure your name, address, SSN or EIN are all correct. Make sure the payment amounts reported are also correct.
If you’ve had several successful projects on Kickstarter, we aggregate the funds raised across all projects and report that amount on one 1099-K.
Don’t worry -- Stripe is required to report the total amount paid out before fees were extracted.
Using Kickstarter as an example: The amount reported on your 1099-K includes the fees that Kickstarter takes out before the funds reach your bank account. Thus, when you report the funds raised on Kickstarter you’ll count the fees as an earning and an equal expense. That means you’ll count the Kickstarter fee and the payment processing fee as an earning and then also the same amount as a business expense so you won’t be taxed for that fee.
Here’s what the form will look like:
This year, Stripe partnered with Payable to generate and deliver 1099s for companies using Stripe Connect.
Payable is a platform for paying contractors and handling the related tax forms.
$0.99 per payment