How do I enter amounts from Form 1099-K, Merchant Card and Third Party Payments?
Separate reporting of Form 1099-K is no longer required by the IRS. Within Drake Tax, gross receipts received via payment card (credit and debit cards) and third party network payments can be entered on the following screens as an undifferentiated part of gross receipts:
- Screen C - Schedule C
- Screen E - Schedule E
- Screen F - Schedule F
- Screen 99K - State Use Only*
- Screen INC in 1120, 1120-S and 1065 returns.
- Screens 3 and 5
See the video Form 1099-K for a demonstration.
Reporting requirements have changed starting with tax year 2022; see IRS News Release IR-2022-226 and IRS Notice 2023-10 for complete details. The IRS also has an FAQ page regarding Form 1099-K.
For special Form 1099-K situations where Form 1099-K was issued for personal items sold at a loss, or for a Form 1099-K that was received in error, use the drop downs for line 8z on the screen 3. Choose Form 1099-K Personal Item Sold at a Loss or Incorrect Form 1099-K, as appropriate. Drake Tax will automatically complete line 24z with the same amount to offset the transaction with zero effect on the return.
Other Federal Withholding from Form 1099-K can be entered on screen 5, line 25c. Only the amount entered flows to the Federal Withholding worksheet.
*State Use Only
Form 1099-K data entry is available for state returns only. Data entered on the 99K screen located on the States tab, is used to produce a copy of Form 1099-K for certain states that require the source document for e-file purposes. State tax withheld entered in box 8, is the ONLY amount that flows to a state form. The 99K screen is only for use by states that require the source document - no data entered flows to a federal form.
Payment settlement entity (PSE) or Electronic payment Facilitator (EPF)/Other third party Indicator
On the 99K screen, if the PSE checkbox is marked, do not complete the PSE's Name and PSE's Phone fields at the bottom of the screen. Those fields are only used If the FILER is an Electronic payment Facilitator (EPF)/Other Third Party and that box is marked instead. A message "There is missing required data on the following screen(s): 99K 1099-K, Third-Party Payments" generates if you make conflicting entries.
For more information about IRS requirements for Form 1099-K, see General FAQs on Payment Card and Third Party Network Transactions
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