Form 1099-K Myths

Form 1099-K is an information return issued by certain third parties to report merchant transactions (e.g., PayPal issuing the form to a business) over a threshold amount ($5,000 for transactions in 2024; $600 for transactions in 2025 and beyond). There’s a lot of confusion and misinformation about the form. The IRS has debunked some of the myths about the form. For example, some recipients think that they owe taxes on the amount reported on the form. Reality: the form only shows the gross amount of transactions; it doesn’t account for returns and allowances, or any deductible expenses. #IdeaoftheDay