How are you submitting 1099s to the IRS this year? posted by: Jareau Wade

Many online marketplaces are responsible for submitting 1099-misc forms to the IRS for any sub-vendors that makes more than $600 a year on their platform.

As a payment processor, Balanced is responsible for reporting 1099-K forms to the IRS for merchants selling goods or services on our marketplace partners’ platforms, but only when those merchants make more than $20,000 from 200+ transactions in a year.

Requirements for reporting 1099-misc:

Requirements for reporting 1099-K:

Beginning in January, 2012, payment settlement entities (PSEs) are required by the Housing Assistance Tax Act of 2008 to report on Form 1099-K for the following transactions.

Payments in settlement of third party network transactions IF:

What this means for Balanced customers:

Balanced, not the marketplace, is responsible for submitting tax forms to the IRS for all transactions that we process. For example, if a merchat on Gittip makes $601 this year from transactions processed via Balanced, neither Gittip nor Balanced will need to submit anything to the IRS. If the merchant makes $20,001 from 200 transactions, Balanced will submit a 1099-K to the IRS and the merchant. Marketplaces processing their merchants’ transactions through Balanced will never need to submit 1099s.

EDIT: Added the last section to clarify some common questions I was receiving.