Disclaimer
This information is provided for general informational purposes only and should not be considered tax advice. Please consult a qualified tax professional regarding how these transactions should be reported on your tax return.
Tax form 1099-K is defined as the Payment Card and Third Party Network Transactions form which is an IRS information return used to report transactions.
The IRS requires third-party payment networks, such as Hemlane, to provide information to them for users who meet specific criteria. Everyone who received $20,000+ and more than 200 transactions will have the transactions reported on a 1099-K form.
Hemlane uses Stripe, a payment processor, to process all payments which is why any of our users who meet the IRS’ criteria will receive a 1099-K form.
What is a 1099-K tax form?
A 1099-K is a federal tax form used to report payments for goods or services processed through a third-party payment network. Companies that facilitate these payments are legally required to report qualifying transactions to the IRS and provide a copy to the payment recipient.
Will I receive a 1099-K form?
You will receive a 1099-K form only if both of the following conditions are met during the calendar year:
- You received $20,000 or more in total deposits through Hemlane
- You had 200 or more payment transactions processed through Hemlane
Both conditions must be met. If you do not meet both, a 1099-K form will not be issued.
Here are a few examples to help clarify:
- You received $25,000 across 250 transactions — you will receive a 1099-K
- You received $25,000 but only had 150 transactions — you will not receive a 1099-K
- You had 220 transactions but your total deposits were $18,000 — you will not receive a 1099-K
Why did I receive a 1099-K last year, but not this year?
IRS reporting thresholds can change from year to year. If you received a 1099-K in a prior tax season, it means you met the requirements that applied for that specific year. If you did not meet the same thresholds in the following year, a form would not be issued.
How will I receive my 1099-K form?
1099-K forms are mailed via USPS in January. You will also receive an email notification once your form has been filed and mailed.
Why is my payment through Hemlane considered a good or service?
Hemlane is a software as a service platform. Payments processed within Hemlane, including debit card, credit card, stored value card, and ACH transactions, are classified as payments for services provided through our platform and our third-party payment processor, Stripe.
While these transactions are categorized as services for reporting purposes, this does not necessarily mean they are taxable income. Hemlane is required to report qualifying payment activity to the IRS, but how those amounts are ultimately taxed depends on your individual tax situation.
When do I need to confirm my tax information?
To ensure timely and accurate delivery of your 1099-K form, please confirm the following information is up to date in your Hemlane account as early as possible:
- A valid SSN or EIN that matches your taxpayer name
- Your legal taxpayer name, such as your LLC name if applicable
- Your current mailing address
Confirming this information early helps prevent any delays or corrections down the line.
What happens after I confirm my tax info?
If you meet the IRS requirements, Hemlane will issue your 1099-K form at the beginning of tax season and automatically file a copy with the IRS on your behalf.
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