Does Stripe Issue 1099-Ks? A Comprehensive Guide

Yes, Stripe issues 1099-K forms to users who meet certain IRS requirements. Understanding these requirements is crucial for businesses using Stripe to process payments.

Decoding the 1099-K: A Stripe User’s Handbook

The 1099-K form is an informational return the IRS uses to track gross payment card and third-party network transactions. It’s not a declaration of taxable income, but rather a record of the total amount processed through a payment processor like Stripe. Think of it as a data point, a key piece of the puzzle the IRS uses when you file your taxes. Ignoring it is like trying to build a house with a missing brick – not a good idea.

This form provides the IRS with an overview of your gross payment volume. This figure includes various payment types handled through Stripe, such as:

• Credit card payments
• Debit card payments
• Other third-party network transactions facilitated through Stripe.

Understanding the Thresholds: When Does Stripe Send a 1099-K?

The IRS mandates that payment processors like Stripe issue a 1099-K to users who meet both of the following criteria in a calendar year:

• Gross payment volume exceeding $20,000. This is the total amount of payments processed, before any fees or deductions.
• More than 200 transactions. This refers to the number of individual transactions processed through Stripe.

Important Note: These thresholds are per account. If you have multiple Stripe accounts, each account is assessed independently. Meeting the thresholds on one account but not another means you’ll only receive a 1099-K for the account that meets both criteria.

For the 2023 tax year, the IRS delayed implementation of the lowered $600 threshold. The prior threshold of more than $20,000 in gross payment volume and more than 200 transactions remains in effect. For the 2024 tax year, the IRS plans for a threshold of $5,000, but this is subject to change. Always consult official IRS resources for the most up-to-date information.

Accessing Your 1099-K Form on Stripe

Stripe typically makes your 1099-K form available electronically through your Stripe Dashboard by January 31st of the following year. You’ll receive an email notification when the form is ready.

To access your 1099-K:

1. Log in to your Stripe Dashboard.
2. Navigate to the Documents section.
3. Look for the 1099-K form for the relevant tax year.
4. Download the form as a PDF file.

It is crucial to ensure your taxpayer information (name, address, and Taxpayer Identification Number – TIN) is accurate and up-to-date in your Stripe account settings. Discrepancies can lead to processing delays and potential issues with the IRS.

What to Do If You Don’t Receive a 1099-K

If you believe you should have received a 1099-K from Stripe but haven’t by mid-February, first double-check your Stripe Dashboard. Ensure your taxpayer information is correct.

If the form is still not available and you believe you meet the IRS thresholds, contact Stripe support directly. They can investigate the issue and provide assistance.

Reconciling Your 1099-K with Your Income Records

The 1099-K reports the gross payment volume. This number is not your taxable income. You must reconcile the 1099-K with your own records to determine your actual income.

This reconciliation process involves:

• Comparing the gross amount on the 1099-K with your sales records.
• Subtracting any refunds, chargebacks, discounts, or other adjustments.
• Deducting business expenses.

Only after these adjustments and deductions will you arrive at your taxable income. It’s essential to keep detailed records of all your transactions and expenses throughout the year to accurately complete this process. Consider using accounting software to streamline this task.

Consequences of Not Reporting Stripe Income

Failing to report income processed through Stripe (even if you don’t receive a 1099-K) can result in penalties from the IRS. These penalties can include:

• Accuracy-related penalty: This penalty applies if you understate your income due to negligence or disregard of rules and regulations.
• Failure-to-pay penalty: This penalty applies if you don’t pay your taxes by the due date.
• Fraud penalty: In severe cases of intentional underreporting, the IRS can impose fraud penalties, which are significantly higher.

It’s always best to err on the side of caution and report all income, even if you are unsure whether it’s taxable. When in doubt, consult with a tax professional.

Frequently Asked Questions (FAQs) about Stripe and 1099-Ks

Here are some frequently asked questions regarding Stripe and the issuance of 1099-K forms.

Q1: What if I don’t meet the IRS thresholds for a 1099-K?

If you do not meet the IRS thresholds ($20,000+ in gross payment volume and 200+ transactions), Stripe will not issue you a 1099-K. However, you are still responsible for reporting all your income to the IRS, regardless of whether you receive a 1099-K.

Q2: How does Stripe determine my location for 1099-K purposes?

Stripe uses the address associated with your Stripe account to determine your location for 1099-K reporting. Make sure this information is accurate and up-to-date.

Q3: What if my address is incorrect on my Stripe account?

You should update your address immediately in your Stripe account settings. If a 1099-K has already been issued with an incorrect address, contact Stripe support for assistance.

Q4: Does the 1099-K include sales tax collected through Stripe?

No, the 1099-K reports gross payment volume, excluding any sales tax collected. You are responsible for reporting and remitting sales tax separately to the appropriate tax authorities.

Q5: What if I use Stripe Connect?

If you use Stripe Connect, the platform handles 1099-K reporting for connected accounts that meet the IRS thresholds. However, you as the platform owner might have separate reporting obligations depending on your business model.

Q6: What happens if I close my Stripe account mid-year?

If you close your Stripe account during the year, Stripe will still issue you a 1099-K if you meet the IRS thresholds during the portion of the year your account was active. You will still be able to access the 1099-K through your account even after closing it, for a limited time.

Q7: Can I request a paper copy of my 1099-K from Stripe?

Typically, Stripe provides 1099-K forms electronically. Check your Stripe dashboard options. Paper copies are generally not the default but may be available upon request depending on Stripe’s policies.

Q8: What is my responsibility if I receive a 1099-K?

Your responsibility is to reconcile the information on the 1099-K with your own records and accurately report your income on your tax return. The 1099-K is simply a data point to help you in this process.

Q9: Does Stripe report payments received through other platforms?

No, Stripe only reports payments processed through its own platform. Payments received through other platforms like PayPal or Square are reported separately by those platforms.

Q10: What should I do if I receive a 1099-K with incorrect information?

If you receive a 1099-K with incorrect information, contact Stripe support immediately. They can investigate the error and issue a corrected 1099-K.

Q11: How long should I keep my 1099-K form?

It’s generally recommended to keep your 1099-K form for at least three years from the date you filed your tax return, as this is the statute of limitations for most tax audits. However, consult with a tax professional for specific guidance based on your individual circumstances.

Q12: Where can I find more information about 1099-Ks?

You can find more information about 1099-K forms on the IRS website (irs.gov). Consulting with a qualified tax professional is always recommended for personalized advice.