1099-K Forms (Updated for 2023 Tax Season)

[Trevor]

Hello!

As we’re currently in tax season, our Tax team is handling a high number of requests to update information on 1099-K forms for store owners. Due to this, there will be a delay in updating your information if you have submitted a request.

Typically, 1099-K forms for transactions processed in the previous calendar year are due to be delivered to merchants on or before January 31st. However, Shopify has obtained a filing and delivery extension. As a result, we anticipate delivering the 2023 1099-K forms to merchants by the end of February 2024. This extension would apply to anyone that is to receive one. 

We understand that getting this information updated is important and want to assure you that our Tax team is working hard to complete your request in the order that it was received. 

We wanted to take this opportunity to clear up some confusion regarding these forms. The 1099-K form is submitted by Shopify to the IRS if you are using Shopify Payments and meet the following requirements:

• For calendar years prior to (and including) 2023: You receive more than 20,000 USD in gross payments and have more than 200 transactions.
• You meet your state's individual thresholds.

If you do not meet the above requirements, then you will not be issued a 1099-K form.

The form is submitted on your behalf by Shopify, so any changes that need to be made can be backdated to the date of the request.

You are not responsible for submitting your 1099-K form. You do not need to wait for the information to be updated on your 1099-K form to file your taxes. 

You can file your taxes without the 1099-K form using the data in your Shopify reports to fill out your tax forms. Any corrections Shopify makes to the 1099-K form can be backdated to the correct date your information changes. 

If you would like to replicate the exact calculation of the 1099-K, to confirm the amounts which would have been reported if you qualified, these are the steps you would follow:

If you've recieved a 1099k in the past, then you should be able to compile the data you need through the finances area. Note, this will not appear if you have not been issued a 1099k in the past. 

1. Go to Shopify Finances → Payouts → Transactions.
2. Click on the option to export ‘1099-K transactions’.
3. Export from Jan 1 - Dec 31 for the tax year you're concerned about, to see if the total of column I (Amount) is over the threshold. 

Otherwise, you can manually calculate your 1099K amount:

1. Log into your Shopify admin Go to Finances → Payouts → Transactions. 
2. Then, export your transactions by date. Make sure to set your date range to about 10 days either side of 2023, to make sure you don't miss anything.
3. Open the 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.
4. Once you have sorted your spreadsheet, delete any rows with an `Available on` date of either 2022 or 2024.
5. Next, sort your spreadsheet by column B (`Type`) and remove any rows with a `Type` listed as anything other than `Charge`. This means you will be deleting any rows with a `Type` of Refund, Adjustment, Chargeback, etc. this is done because the 1099-K only reports _gross_ processing which is determined by the value of the charges alone.
6. Check that the spreadsheet only contains transactions with a `Type` listed as `Charge` and an `Available on` date of 2023.
7. The final step is to calculate the sum of column I (`Amount`). This will correspond to the value which would have been reported on your 1099-K if you had qualified. The number of rows in the export (minus the heading row) will show you the number of transactions.

Merchants who use Shop Pay Instalments (SPI) may not be able to reconcile using this manual method. This is because the 1099-K form excludes “interest-bearing” transactions  through Shop Pay Instalments (SPI), whereas the transactions export does not exclude them. This is because the general transaction export should have these transactions included. It's only for 1099-K reporting that they should be excluded.

Split Pay 'Shop Pay Instalment' (SPI) transactions. "Split Pay" transactions processed via Shop Pay Instalments (SPI) will be included in the 1099-K form that we issue. The gross transaction figures being reported from SPI refer to the full order amount, whether it’s been paid back in full or not.

Interest bearing transactions through 'Shop Pay Instalments' (SPI) are not included. Interest bearing transactions, even 0% interest transactions, are not reported on our 1099-K forms. These transactions are more akin to loans, and run through a different banking partner model. If you need confirmation that the missing transactions are interest bearing ones please reach out to Shopify Support.

More information on the 1099-K form and how to retrieve your form can be found in our help article. If you believe a 1099-K form should be issued to you but you are not seeing one available in your Shopify admin, then please contact Shopify Support for further assistance.