What is Form 1099-K?

How it works

Form 1099-K is filed by third-party settlement organizations (TPSOs) and payment settlement entities (PSEs) — Stripe, PayPal, Square, Venmo Business, Cash App for Business, Etsy, eBay, Amazon, Mercari, and others. They report gross payments processed to the merchant, plus the IRS's parallel copy.

The form was created in 2008 to close a gap in 1099 reporting — at the time, payments routed through processors weren't picked up by 1099-NEC because no individual payer was paying the merchant directly. 1099-K closed that gap by making the processor the reporter.

The threshold story

Historically (2008–2021): $20,000 and 200 transactions in a calendar year.

The American Rescue Plan Act (2021) reduced the threshold to $600 with no transaction minimum, effective 2022 — a massive expansion. The IRS delayed enforcement repeatedly:

• 2022: $20,000 + 200 transactions (delay).
• 2023: $20,000 + 200 transactions (delay).
• 2024: $5,000 with no transaction minimum (first phase-in).
• 2025: $2,500 with no transaction minimum.
• 2026 onwards: $600 with no transaction minimum (full ARPA implementation, subject to potential further legislative changes).

Verify the current-year threshold against IRS guidance — Congress and the IRS have changed the rules multiple times.

Non-residents and 1099-K

This is the part most non-resident founders miss. When you onboard a US LLC at Stripe, Stripe asks for tax certification:

• If you certify as a US person via W-9: Stripe issues a 1099-K once the threshold is hit. The income is reported to the IRS under the LLC's EIN. The IRS then expects to see the income on the LLC's federal return (Schedule C of 1040 for SMLLC, 1065 for multi-member, etc.).
• If you certify as a foreign person via W-8BEN-E (the LLC is foreign-owned and disregarded, so the owner's W-8BEN governs): Stripe does not issue a 1099-K. The transactions are recorded under non-resident reporting; if any portion is FDAP or ECI, Form 1042-S may apply instead.

Examples

• US-citizen freelancer takes Stripe payments through a Wyoming LLC. Total $80,000 in 2026 → 1099-K issued for $80,000 gross. He reports on Schedule C of Form 1040 (LLC is disregarded → flows through to owner). Net after expenses is taxed at his individual rate plus self-employment tax.
• French founder's Wyoming LLC takes Stripe payments. $80,000 in 2026, properly certified with W-8BEN at onboarding (LLC is disregarded, owner is non-US). No 1099-K issued. The founder owes US federal tax only if there's ECI; foreign-source treatment is the typical answer for SaaS sold globally with no US trade or business.

Common mistakes

• Forgetting that 1099-K reports gross. Stripe shows the gross amount processed before its fees and refunds. The taxable income is net of those costs — but the 1099-K headline is gross.
• Receiving a 1099-K for personal Venmo / Zelle / Cash App transfers. When friends use a "goods and services" tag, the platform issues a 1099-K. Either contact support to recategorise or report on Schedule 1 with an offsetting personal expense entry.
• Onboarding Stripe with the wrong tax form. US person certification (W-9) by a non-resident triggers 1099-K reporting that doesn't match the underlying tax position. Always match the LLC owner's residency to the tax certification.
• Thinking 1099-K and 1099-NEC are mutually exclusive. They aren't. A US client paying you partly via direct ACH (subject to 1099-NEC at $600) and partly via Stripe (subject to 1099-K at the threshold) generates both forms covering different segments of the same income.