Did you receive a 1099-K tax form this year? If you’ve never seen this form before and are unsure what to do with it, don’t freak out — we can help you understand your Form 1099-K and guide you through reporting any necessary income.
How do I use my 1099-K when filing my tax return?
TaxAct® takes accurate tax reporting seriously. That’s why we’ve spent much time and care optimizing our 1099-K reporting this year. We’ve added more detailed questions about what your 1099-K was for so we can help pull the proper tax forms for you.
First, we’ll ask you for information about what types of income you’ve earned this year:
As you can see from the screenshot above, Form 1099-K appears in more than one place — typically, this form is used for those who are self-employed, operate a side hustle, or sell personal items online. You could also receive a 1099-K for real estate rentals and royalties or farming.
If you received a 1099-K for goods you sold as a hobby, there is also a third option, “activities not for profit,” as shown below.
As you go through our 1099-K reporting process, we’ll ask you comprehensive questions about your payment transactions and who sent you the 1099-K. If you have more than one 1099-K, we’ll go through them one at a time. It’s possible you could also have multiple businesses on a single 1099-K — if so, we can help walk you through that process as well.
Knowing what the payments were for helps us determine whether you owe taxes on that income. Based on your answers, we’ll help you correctly report the income and enter any expenses to reduce your amount of taxable income, if applicable.
Here’s an example question:
This would be a good time to mention that not all the transactions on your 1099-K are necessarily taxable income. Form 1099-K only shows the gross amount of all your payment transactions, while you only owe taxes on your net income. For instance, if you sold a personal item at a loss, no income would be recognized on the sale, and, therefore, no income taxes are owed.
TaxAct will help you decide which transactions are taxable and which are not based on the information you provide.
After you’ve entered all the applicable transactions from your 1099-K, we’ll review what you told us (shown below). At this point, you’ll be able to go back in and edit or add to each section if necessary.
After that, you’re done with your 1099-K!
If you are a side hustler, self-employed, hobby seller, or someone who sells used personal items online, you could receive your first 1099-K this year. If so, knowing what this form is and how to use it is essential.
TaxAct makes the reporting process as straightforward as possible. When you file with us, you can rest easy knowing we’ll guide you through it step by step.
All TaxAct offers, products and services are subject to applicable terms and conditions.
This article is for informational purposes only and not legal or financial advice.
The post How to File a 1099-K on TaxAct appeared first on TaxAct Blog.
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