Instructions for Form 1099 K – Merchant Card & third-party network payments 2021

Beginning with the new tax year, the IRS implements new rules and regulations in reporting the independent contractor payments. Taxpayers are responsible to follow the specific instructions for successful File Form 1099 K Online.

What’s New on Form 1099 K for 2021?

Here are the changes made in “IRS Form 1099 K” in the tax year 2021:

Exception of third party network transactions

Nowadays everything goes online. Due to which online payments have increased dramatically. So, the IRS made changes to the 1099 K reporting threshold of $20,000 to $600. Yes, the taxpayers must report the individual transactions of $600 or more on “1099 K”. Previously, businesses used 1099 K if the third-party network transactions made $20,000 or more. This means that payments made below the minimum threshold are not reported on the tax return. Thus, from now, report the third-party transaction exceeding $600 in a tax year regardless of the total number of transactions.

Continuous use of Form K and instructions

Form 1099-K and these specific instructions are changed from annual revision to continuous use. Yes, both the form 1099 K and its specific instructions will be updated as needed by the IRS.

What types of payments are not included in the 1099-K Tax Form?

Here is a list of exempted payments on “Form 1099 K”:

  • Payments made by US payers or by middlemen to offshore accounts outside the United States.
  • Amount paid by US payers or middlemen to accountants outside the US.
  • Payments by US payers to foreign payees.
  • Compensation paid by non-U.S. payers or middlemen to foreign payees.
  • A withdrawal of funds at an automated teller machine (ATM) via payment card, or a cash advance or loan against the cardholder’s account.
  • A check is issued in connection with a payment card accepted by a merchant or other payee.
  • Any transaction in which a payment card is accepted as payment by a merchant or other payee related to the issuer of the payment card.

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