1099-k form. The monthly gross revenue does not equal what shopify is reporting

[Madelman333]

This is a rookie question - but the 1099k form is listing revenue that is lower than what is reported in the shopify admin.

Is the gross revenue on the 1099 = gross revenue - (sales tax + shipping + returns)?  Again sorry for the rookie question here, just want to make sure I understand the information correctly. TY!

[Rick]

Hi @Madelman333 

Welcome to the Shopify Community! 

I understand you have some queries about your 1099-k form, and in particular why you are noticing a discrepancy between the total on the form, and in the Shopify admin reports. I would be happy to clarify this for you! You don't need to apologize for asking any Shopify related questions here! Even the most basic of questions are valid and welcome here in the Community, and if I am unable to answer for whatever reason, then there are plenty of other merchants and partners who would be happy to share their experiences!

To provide some context, the 1099-k form reports the gross transaction value. It does not factor in things like refunds, chargebacks, credit card processing fees, adjustments or any bills that you may have paid using your Shopify Balance (if applicable).

The 1099-K that we issue to merchants who qualify for one, is only for transactions processed through the Shopify Payments gateway (this includes Shop Pay Installments, but excludes interest bearing transactions through Shop Pay Installments). This means the form does not include transactions processed through any other gateways such as PayPal, cash sales, or any other alternate/manual payment methods that you have enabled on your store. 

To summarize: the system that generates the 1099-k is using the data from your Shopify Payments account to determine what the numbers are. The reports in your analytics don't use the same data as the system creating the 1099-K does. If you wish to confirm your 1099-K figures based on your reports, then let me know and I can explain how to manually reconcile the amounts (it will involve some calculations and spreadsheet editing).

You mentioned that the number on the form is lower than your admin - is it possible that some of the figures shown in the reports are from other gateways, and not Shopify Payments as mentioned above?

In case you are interested in learning more about how the 1099-k form works, I would highly recommend checking out the following resources:

• Understanding Your Form 1099-K (official website of the United States Government resource)
• Tax Reporting on Shopify - United States

[mychelley201]

Hi Rick, so we should be figuring the 1099K will report the Net sales, not the gross sales? So this way it's not taking into consideration the returns or the discounts? I often send free products to influencers for collaboration. I often put in the full amount and then put in a 100% discount. I just want to make sure that's not counted as a "sale". I think that amount would show as gross sales but not under the net sales since it's not taking the discounts into consideration and just want to make sure it's the net sales on the 1099. If not, I'll have to start putting that free product in as zero dollars. thanks

[Rick]

Hi @mychelley201 

Thank you for joining in here. I understand that you are wondering about net vs gross sales when it comes to the 1099-K on your Shopify store.

I can confirm that the 1099-K reports the gross transaction value. It does not factor in refunds, adjustments, chargebacks, credit card processing fees, or any bills that you have paid using your Shopify Balance (if applicable). The 1099-K only reports gross processing which is determined by the value of the charges alone.

This IRS resource here has some great information which goes into detail about what type of transactions are considered eligible. We also have a YouTube video here which provides some more information about understanding 1099-K forms.

Feel free to refer to my previous post further down in this thread, which explains how you can manually confirm the amounts in your 1099-K, which will allow you to get a better idea of exactly what would be included, and what would not.

[mychelley201]

Ok thank you. So a gross transaction of something $300 with a 100% discount would be reported as $0 since the actual transaction was $0 correct?

[Rick]

Hi @mychelley201 

As per the IRS resource linked in my last reply, it states that 'the gross payment amount on the 1099-K reports the total payments you received. It doesn't include adjustments for fees, credits, refunds, shipping, cash equivalents or discounts. These items are not income. You can deduct them from the gross amount.'

To further expand on what the 'gross amount' means, feel free to check out this IRS FAQ document here which states: 'the total dollar amount of total reportable payment transactions for each participating payee without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts.'

Basically, what happens before the payment is processed (discounts for example) does not matter. For 1099-K reporting, what we are concerned with is the amount processed when the actual payment is taken i.e. every cent that passes through the Shopify Payments gateway. So it would take into consideration discounts, once the discounts have been applied prior to the payment capture. This means the full amount originally charged on a buyer's card.

If you have any doubts or concerns about what your tax obligations are, it would be best to consider consulting with your local/state tax authority or potentially seeking professional tax advice.

[mychelley201]

Do you know if the Shop Pay Installments sends out a separate 1099k?

[Rick]

Hi @mychelley201 

Thanks for reaching back out here. Apologies for my delay in replying, I have been out of office.

Split Pay transactions processed via Shop Pay Instalments are already included in the 1099-K form that we issue. The gross transaction figures being reported from Shop Pay Instalments refer to the full order amount, whether it’s been paid back in full or not. However, interest bearing transactions through Shop Pay Instalments, even 0% interest transactions, are not reported on our 1099-K forms.

If you require more confirmation about transactions and whether or not they are interest bearing ones, please feel free to reach out to our support team directly via our help center so we can take a closer look and do our best to assist.

[Bobbie_Floerchi]

Hi Rick: 
The Gross on my 1099 is LOWER then the gross reported in Shopify.  I do not have any other merchant processing, I took no gift cards, took no cash or check sales. IF the 1099 is before discounts and returns, there seems to be an issue. 

[Greta]

Hey, @Bobbie_Floerchi!

Thanks for reaching out. 

The 1099-K issued by Shopify is only for transactions processed through Shopify Payments (including Shop Pay Instalments). It does not include transactions processed through any other gateways (such as PayPal), alternate/manual payment methods or cash sales. Interest bearing transactions through 'Shop Pay Installments' (SPI) are also not included.

If the numbers still don't match up, feel free to contact our team through the Help Center. Simply enter your question into the chat assistant and click I still need help to be connected with a Support Advisor. 

Let me know if you have any other questions! 

[Bobbie_Floerchi]

hi Greta: 

Can someone please provide a legend - Shopify Reports does not match shopify 1099. 

mid 5 figures off.  

[Mac]

Hi, @Bobbie_Floerchi 

Thanks for your response.

I understand that you are having some issues with your reports not matching. Feel free to review the Tax reporting document and 1099-k forum page to learn more about the process. You can always reach out through the Help Center for more direct support. 

[James1973]

Just to piggy back on to this - you may find that using this 3rd party software will help simplify all of this for you.  It's the reason it was created when there didn't seem to be other options out there to do this for us.

https://linkmybooks.com?fpr=trusted-brands-direct

[James_Dubay]

I can never find a report in Shopify that matches the 1099-K form gross amounts.

Can you please let me know how to manually reconcile the amounts 

Thank you

James Dubay

[Rick]

Hi @James_Dubay 

Thanks for joining in!

I understand that you are having some difficulty trying to match the 1099-K gross amounts to a report in Shopify. I'd be happy to elaborate on this. As explained in my last reply, the reports in your Shopify analytics won't necessarily exactly match the 1099-K, as it is two separate systems that use different data. 

If you would like to manually confirm the amounts in your 1099-K, then you can replicate the exact calculations by following these steps. Some basic spreadsheet skills will be required, and you can use a free editor such as Google Sheets to follow along:

• From your Shopify admin, navigate to Finances > Payouts > Transactions.
• You will need to export your transactions by date (making sure to set your date range to about 10 days either side of 2022, just to make sure you don't miss anything).
• Open the exported file and sort the sheet on column H ('Available on'). This is the date when the money actually changed hands from the customer's bank to your processing account and is the date Shopify uses for tax purposes.
• Once you have sorted your spreadsheet, delete any rows with an 'Available on' date of either 2021 or 2023.
• After this, sort the spreadsheet by column B ('Type') and remove any rows you can see with a 'Type' listed as anything other than 'Charge'. What this means is you will be deleting any rows with a 'Type' of; Refund, Adjustment, Chargeback, etc. because these are not included in the 1099-K calculations.
• At this stage, it's important to double check that the spreadsheet only contains transactions with a 'Type' listed as 'Charge' and an 'Available on' date of 2022.
• Finally, you can calculate the sum of column I ('Amount'). This number should correspond exactly to the value which is reported on your 1099-K. The number of rows in the export (minus the heading row) will also show you the total number of transactions.

The results from this exercise should match the figures in your 1099-K, however if they don't then you can feel free to contact our support team here and we can check in with our Tax Team for clarification if necessary. 

[James_Dubay]

Thank you

[positiontech]

James, The info Rick provided is somewhat incorrect. Rick's advise was helpful for obtaining the transaction report but Rick states that Shopify uses Column H (Available on date) as the date to calculate the 1099-K, this is incorrect it is using Column A (Transaction Date). I spent hours trying to figure out why using Ricks instructions my transaction amounts on the report I pulled and 1099-K from Shopify were not matching. It wasn't until I added all the transactions made in the year until Dec 31st regardless if they posted after Jan 1  in Column H that the numbers matched. So pull the report as Rick instructs and remove all other transactions other than charges.  Then sort Column A by date to make sure you have from transactions only from Jan 1 to Dec 31st listed. Total up Column I (Amount) and it should match your 1099-K. The fee's paid to Shopify for your taxes are Column J (fees).  Hopefully this information helps you and others who are trying to figure this out do it quickly. 

[smallbizsarah]

I'm a bookkeeper who works with e-commerce store owners. I was having trouble with the Shopify 1099-K tie out with only one client in particular. What I discovered was that if a customer pays with a gift card, this is also not included in the Shopify 1099-K figure. It seems obvious now, but it took me a while to figure out as I haven't seen that tip anywhere in the Shopify 1099-K help information. Maybe it will help you. I still have a difference even after downloading the CSV file that Rick suggests, but my difference is much smaller now.

[James_Dubay]

thx