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!
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:
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
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.
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?
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.
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.
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.
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
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:
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.
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.
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