Form 1099-K

Form 1099-K, Payment Card and Third Party Network Transactions, reports payment card transactions and third-party network transactions. Payment card transactions aren't subject to a federal dollar or transaction-count threshold. A third-party settlement organization, such as a payment app or an online marketplace, only has to report once you exceed $20,000 in gross payments and exceed 200 transactions for tax year 2026. If you expected a Form 1099-NEC instead, the distinction depends on how the payment was made and which entity has the reporting responsibility.

Form 1099-K vs. Form 1099-NEC

Form 1099-NEC may report qualifying nonemployee compensation a business pays directly, using methods such as check, cash, or a direct bank transfer, outside the card and third-party network system. Form 1099-K reports payment card transactions and third-party network transactions: payments made by card, or routed through a payment app or marketplace that settles transactions between unrelated buyers and sellers.

Federal law assigns the reporting job for a payment card transaction or a third-party network transaction to the payment settlement entity that processed it, not to the business that made the payment. A business excludes that payment from its Form 1099-NEC reporting. This is why a contractor paid partly in cash and partly through a payment app may see both forms in the same year: a 1099-NEC for the cash portion, a 1099-K for the app portion, each one covering a different slice of what they were paid.

Form 1099-K reporting limits

For tax year 2026, the federal reporting threshold for third-party network transactions is more than $20,000 in gross payments and more than 200 transactions. This threshold was restored by the One, Big, Beautiful Bill Act (OBBBA), which reversed a lower $600 threshold that had been scheduled to phase in under the American Rescue Plan Act of 2021. The federal threshold does not apply to payment-card transactions.

A number of states set their own reporting threshold for third-party network transactions, and several of those are lower than the federal rule. Check your state's requirement if you're unsure which one applies to you.

Who issues Form 1099-K

Third-party settlement organizations and payment card processors issue Form 1099-K, not the business or person who made the purchase or engaged the contractor.

A payment card processor handles payment card transactions, which aren't subject to the federal threshold. A third-party settlement organization operates a network that connects unrelated buyers and sellers, such as a payment app or an online marketplace. It only has to report once you exceed $20,000 in gross payments and exceed 200 transactions in third-party network transactions.

The two aren't interchangeable: the reporting requirements differ for payment card transactions and third-party network transactions.

Who receives Form 1099-K

You should receive a Form 1099-K if you accepted payment card transactions, or if you crossed more than $20,000 in gross payments and more than 200 transactions in third-party network transactions through a payment app or marketplace.

This includes a contractor paid partly through a payment app or by credit card. That portion of their pay is reported on Form 1099-K, not on Form 1099-NEC.

What to do if you receive Form 1099-K

Form 1099-K reports the gross amount of payments processed, not your net income and not a determination of what's taxable. Reconcile the figure against your own records to work out the correct tax treatment.

If the payments reflect business income, report them as such on your return. If the form includes personal items you sold, for example through an online marketplace, you generally owe tax only if you sold them for more than you originally paid. If the form includes an amount that isn't yours, a duplicate, or a personal reimbursement or gift miscoded as a sale, contact the issuer to request a corrected form and keep your own records showing what the payment was for.

How SurePayroll fits in

SurePayroll® By Paychex pays W-2 employees and independent contractors from one platform and generates year-end W-2s for employees and Form 1099-NECs for contractors paid directly through it.

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