Form 1099-K for Card Payments: What Merchants Need to Know

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This page is general information, not tax advice. It is current as of September 16, 2026, and summarizes IRS pages listed at the end. Tax rules change, so confirm with the IRS and your tax preparer. CELER Merchants is an independent merchant services agent, not a tax adviser.

What Form 1099-K reports

Form 1099-K reports payments you received for goods or services during the year from credit, debit or stored-value cards such as gift cards, and from payment apps or online marketplaces, which the IRS calls third party settlement organizations (TPSOs). The IRS says payment card companies, payment apps and online marketplaces must file Form 1099-K with the IRS each year and send you a copy by January 31. The filer is a payment settlement entity (PSE): the company that submits the instruction to transfer funds to your account to settle the transactions.

Card payments and payment apps have different thresholds

This is the point that trips up many businesses. The $20,000 threshold people talk about applies to payment apps and online marketplaces, not to card payments processed through your merchant account.

The $20,000 and 200 rule is back

The IRS says the One, Big, Beautiful Bill retroactively reinstated the reporting threshold in effect before the American Rescue Plan Act of 2021, so TPSOs are not required to file Form 1099-K unless the gross amount of reportable payments to a payee exceeds $20,000 and the number of transactions exceeds 200. The IRS published FAQs on the change in Fact Sheet 2025-08 on October 23, 2025. The IRS also says your state may have a lower reporting threshold for TPSOs, and that you must report all business income whether or not you receive a Form 1099-K.

The gross amount is not what reached your bank

The IRS says the gross payment amount on Form 1099-K isn't adjusted for fees, credits, refunds, shipping, cash equivalents or discounts. So the figure will not match your deposits: processing fees taken out before funding, refunds and chargeback reversals all sit inside it. Debit card cash back is another difference. The IRS says cash back you give customers is reported on Form 1099-K but generally is not part of your gross receipts and is not a business expense, so keep records of it. Your monthly merchant statements are the records that explain the gap.

When the form does not match your business

The IRS describes several common mismatches. If you share a card terminal with another person or business, the form includes all of it; the IRS says to file and furnish the appropriate information return, where required, for the others and keep records of payments to them. If you bought or sold a business during the year and the terminal was not updated, request a corrected form from the PSE or filer. If you changed business structure or tax ID and kept the same terminal, the IRS says to notify your merchant acquirer immediately of the name and tax ID change. If one terminal takes payments for two activities, use your books to report each on the right schedule. If the tax ID or gross amount is wrong, ask the filer named on the form for a correction; the IRS says it cannot correct a Form 1099-K for you, and you should not wait to file.

What to do

1. Make sure the legal name and tax ID on your merchant account match the entity that files the tax return. 2. Tell your processor right away when you change entity, tax ID or ownership. 3. Download your monthly statements and year-end summary, and keep them with your tax records. 4. Reconcile the Form 1099-K gross amount to your statements: fees, refunds, chargebacks, cash back and any shared-terminal sales. 5. If the form is wrong, request a corrected form from the filer. 6. Give your tax preparer the form and the reconciliation together.