Tax Season Is Here: What You Need to Know About Your 1099-K

Tax season can feel overwhelming, especially when IRS forms start showing up in the mail. One of the most common questions we receive this time of year is about the 1099-K form. To make things easier, here’s a clear breakdown of what the 1099-K is, why it matters, and how our customers can access theirs.

What Is a 1099-K Form?

A 1099-K is an IRS tax form that reports the total amount of electronic payments your business received during the year. This includes:

Credit card transactions
Debit card transactions
Other electronic payments processed through your payment processor

Important to know:

A 1099-K does not report cash sales
It shows gross sales, not profit (fees, refunds, and chargebacks are not deducted)

The IRS uses this form to verify that businesses are accurately reporting their income.

How the 1099-K Helps With Your Taxes

Your 1099-K is a helpful reference when preparing your taxes because it:

Confirms your total card-based sales for the year
Helps you reconcile your POS reports
Supports accurate income reporting to your accountant or tax preparer

Your total business revenue is typically calculated by combining:

1099-K reported card sales
Cash sales from your POS reports

How to Get Your 1099-K (By Processor)

Customers Processing With EPI

1099-K forms are mailed directly to the business address on file
Please allow time for postal delivery
If you have not received your form by mid-February, contact our team and we’ll be happy to assist

Customers Processing With Clearent

1099-K information is available through the Clearent online portal
You can log in, download, and print your form directly
If you need help accessing the portal or locating the form, contact us and we’ll guide you

Is it accurate that the 1099-K includes the RCD fee?

Yes. This is correct.

A 1099-K reports GROSS electronic payment amounts, not net revenue.

That means:

Card transaction amount PLUS
Any RCD / service / non-cash adjustment fee collected at the point of sale

If you rang up:

$100 item
- $4 RCD fee
  👉 The processor sees $104 processed
  👉 The 1099-K reflects $104

This is IRS-required reporting, not a choice by the processor

Why this happens (important concept)

From the IRS’s perspective:

The customer paid $104
The business received $104
What happens after (fees, offsets, processor costs) is handled on the tax return

The IRS does not net anything out on a 1099-K.

What You should NOT do

❌ Do NOT try to “correct” or dispute the 1099-K
❌ Do NOT remove the RCD portion from gross sales
❌ Do NOT assume you owe tax on the full RCD amount

The form itself is doing exactly what it’s supposed to do.

What you should do

Here’s the clean, correct guidance:

✅ 1. Report the FULL 1099-K amount as gross receipts

This keeps you aligned with IRS matching systems (very important).

✅ 2. Deduct the RCD portion as an expense

The RCD amount is not profit — it offsets processing costs.

Typically categorized as:

“Merchant processing fees”
“Cost of card acceptance”
Or similar expense line (CPA decides)

Result:

Gross income stays accurate
Taxable income reflects reality