1099-K and 1099-MISC are two different forms that you may encounter during your tax year. 1099-K is a form that records “Payment Card and Third Party Network Transactions.” Think PayPal, Square, and any other way you can accept credit cards, debit cards, or digital transactions.If you make more than $600 on any platform, you’re sent a 1099-K. You need to review your gross sales, deduct COGS, taxes, fees, and returns to determine how much you owe. This is submitted on Section C of your tax return.
1099-MISC is a form that’s produced if you earn more than $600 for freelance work in a year. Businesses are required to send a 1099-MISC to any freelance worker that charges more than $600 or more for their services. For instance, if you renovate a breakroom for $3,000, a 1099-MISC is sent to you from the customer’s business. If you provide services for an individual, such as painting a home, the individual won’t send you a 1099-MISC. Instead, this is reported by your business as income.