When tax season is approaching,
you’ll want to make sure that you have all the necessary forms and documents in order.
The 1099-K form is a specific tax document that you may have access to.
In this video we’ll go over what 1099-K forms are, what's in them,
and what to do if you notice errors on them.
In the US, Shopify is required to submit a 1099-K form to the IRS for each merchant who
processes more than $600 in sales, and has more than 200 transactions on Shopify Payments
in a calendar year. The form shows, gross transactions for the
entire calendar year. The form is provided by Shopify to the merchant,
and the IRS on an annual basis for every shop that qualifies.
So you won’t need to submit the form to the IRS yourself.
However, you don’t need to wait for the information to be updated on your 1099-K form
to file your taxes.
In some states, this form is required if the amount is even lower.
You can consult with your local or state tax authority,
or the IRS for information on your states 1099-K reporting requirements.
If you meet the requirements for the 1099-K form, you can find and download it in your Shopify admin.
First, you will need to ensure you are logged on as the account owner to access the form.
Head to your admin, click “Settings,” and then “Payments.”
Under the “Shopify Payments” section click “view payouts”
Now click “Documents” to get access to any available Tax documents.
Finally, you will see the option to download your 1099-k form in PDF format.
The 1099-K form includes details about the “Payee”.
The “Payee” is the individual or business that’s using Shopify payments.
This information should match the details used when the individual or business had set-up
up the “Shopify Payments” gateway initially.
It includes the “Payee’s name” and address, which is either the name of the Individual,
or business attached to the account.
As well as the “Payee’s TIN,’ which is either the “Employee identification number”or
the “Social Security Number” belonging to the payee. This information varies depends
on whether the account is run by a business or an individual.
It also contains gross amounts processed for online and in-person payments.
This is every cent that passes through the Shopify payment’s gateway, ignoring refunds,
chargebacks, fees, and is broken down by month. If you changed your Shopify store information
under “Settings” and “Store details” in your admin, this does not change the details
stored in Shopify Payments.
Once you’ve reviewed your forms, you might notice errors in your Payee details, the amounts
listed, or both. For Payee detail errors, you might have meant
to set up Shopify Payments under a business, but you see a person’s name on the 1099-K
instead. Or you could notice the “EIN” or the “Social
Security Number” looks wrong, however, this is not a cause for concern.
1099-K forms can be corrected, and the IRS accepts corrections years after filing.
If you notice that your payee details are incorrect, you can contact the Shopify Support
team, who will be happy to help make corrections.
Your 1099-k amounts may look different than you expected for a few reasons.
The 1099-k reports gross transaction value. So it will not factor in, Refunds, Chargebacks,
Credit card processing fees, or Adjustments.
The reporting date for a transaction is also determined by when the funds settle - not
necessarily by the transaction date, or the date you received the payout.
It’s worth noting that Shopify's Analytics and Reports are helpful tools, however they
cannot be used to confirm 1099-k form amounts.
If you’d like to see the total amounts that should be on your 1099-K form, you can download
the transactions which were included in the form from your Shopify admin.
To do this, head to “Settings” and then click “Payments.”
Click “View Payouts.”
Next, click “Transactions.”
At the top of the transactions page, click “Export” to open your exporting options.
If you’ve received a 1099-k form, you can then click the option to export 1099-K transactions.
Now, select the date range for the whole tax year that you want to look at.
For example, If you want to compare amounts for the 2021 tax year, select January 1st,
2021 to December 31st, 2021. and finally, click “Export Items”.
This allows you to download and view a spreadsheet with all transactions reported on the 1099-K
form.
The total processed on the spreadsheet will match the total on your 1099-K form.
If the payee details or the amounts on your 1099-K form are incorrect, you’ll need to
reach out to the
Shopify support team for assistance. Now you know all about the 1099-K form, and
what it means for your store in the upcoming tax season.
For more information on everything shown in this video, visit help.shopify.com