In 2022, the IRS updated the thresholds for receiving a 1099-K, so many more users may now receive a 1099-K form.
Users may be required to receive a 1099-K tax form from Dwolla, Inc., which reports on earnings received via a financial network like the Horizon Payment Center. Dwolla, Inc. is a third-party company that operates and performs all the financial transactions made with the Horizon Payment Center.
What is a 1099-K tax form?
A 1099-K tax form indicates payment earnings that have passed through a third-party financial network like the Horizon Payment Center. They are issued by credit card and ACH processing companies to report on financial earnings that have passed through their processing networks. This form is not the same as a 1099-MISC or a 1099-NEC tax form which officials commonly receive from officiating organizations. These tax forms are completely different and may reflect the exact same earnings in all these tax forms.
Who is Dwolla Inc.?
Dwolla Inc. is a third-party financial processor that operates the ACH bank transfer functionality of the Horizon Payment Center. Any payment transaction processed through the Horizon Payment Center is processed and handled by Dwolla Inc. As a financial network provider, they have both federal & state reporting requirements to indicate and disclose funds that pass through their processing network. This information is reported via tax Form 1099-K.
I already received a 1099, why am I getting another one?
A 1099-K tax form is not the same as a 1099-MISC or a 1099-NEC tax form which officials commonly receive from officiating organizations. These tax forms are completely different and may reflect the same earnings in multiple reports. If you've earned enough money, both your officiating organization AND Dwolla Inc. will be required to send you tax forms regarding the same funds. Your officiating organization may send you a 1099-MISC, 1099-NEC, or W-2 tax form, and Dwolla Inc. will send you a 1099-K tax form for the exact same funds if you meet the reporting thresholds shown below. Both the federal and state Form 1099-K are information returns, and the gross payments reported on a Form 1099-K do not necessarily represent reportable income. The form should be used in conjunction with other tax records (bank statements, invoices, etc.) to report taxable income, if any. Please consult your tax advisor to determine your tax reporting requirements.
Who receives a 1099-K tax form?
In order to receive a 1099-K tax form from Dwolla, Inc., you must have received payments via the Horizon Payment Center and meet at least one of the following conditions:
You have received payments during the calendar year totaling $600 USD or more, which exceeds the federal IRS threshold.
You reside in the state of Maryland, Vermont, Massachusetts, Mississippi, Virginia, or the District of Columbia, and you have received more than $600 USD in gross payments within a calendar year.
You reside in the state of Missouri, and you have received more than $1,200 USD in gross payments within a calendar year.
You reside in the state of New Jersey, and you have received more than $1,000 USD in gross payments within a calendar year.
You reside in the state of Arkansas, and you have received more than $2,500 USD in gross payments within a calendar year.
You reside in the state of Illinois, and you have received 4 or more payments greater than $1,000 USD in gross payments within a calendar year.
Maryland, Vermont, Massachusetts, Mississippi, Virginia, Missouri, New Jersey, Arkansas, Illinois, and the District of Columbia are the only states/territories with different thresholds than the federal requirement when this article was written (May 2022).
What do I do with this?
Both the federal and state Form 1099-K are informational returns, and the gross payments reported on a Form 1099-K do not necessarily represent reportable income. The form should be used in conjunction with other tax forms (like W-2's, 1099-MISC, and 1099-NEC forms) and tax records (bank statements, invoices, etc.) to determine your taxable income. You should consult your tax advisor to determine your tax reporting requirements.
Where can I learn more?
If you want to learn more, you can refer to the IRS website, which outlines full details on both the 1099-K tax form and the 1099-MISC and 1099-NEC tax forms.