Understanding 1099-K vs 1099-MISC: Filing Rules Every Payer Should Know

Both Form 1099-K and Form 1099-MISC report nonwage income, but the IRS treats them differently, so they are easy to mix up. Knowing all the key differences between these two forms can help a payer decide which form to issue and avoid duplicate reporting and compliance penalties that can quickly add up. Read on for clarity on 1099-K vs 1099-MISC reporting rules, trigger thresholds, and more.

What Is Form 1099-MISC and Who Files It?

Form 1099-MISC reports miscellaneous payments made directly by a payer, like rents, prizes, medical fees, or attorney proceeds.
Common reporting categories for Form 1099-MISC include:

Note:

• Under the 1099-MISC $600 rule, a payer must file once total payments to a single recipient reach $600 or more within the year.
• For royalties, the threshold is $10.
• If backup withholding (24%) applies, the form must be filed regardless of the amount.

Key 1099-MISC deadlines for 2026 filings

• Recipient copies: Due February 2, 2026 (because January 31, 2026, falls on a Saturday).

(If Form 1099-MISC reports only amounts in box 8 or box 10, recipient copies are due February 17, 2026, due to weekend/holiday shift.)

• Paper filing: Due March 2, 2026 (because February 28, 2026, falls on a Saturday).
• E-filing with the IRS: March 31, 2026.

E-filing is mandatory if you are filing a combined total of 10 or more information returns in the calendar year, aggregated across almost all return types (for example, 1099s and W-2s).

A core part of payer 1099 compliance for 2026 is collecting Form W-9 before issuing payments, verifying TIN accuracy, filing on time, and keeping copies of filed information returns (or the ability to reconstruct them) for at least 3 years from the due date 4 years if federal tax was withheld (for example, backup withholding).

What Is Form 1099-K and Who Files It?

Form 1099-K is used by payment-card settlement entities and Third-Party Settlement Organizations (TPSOs). It reports total transactions handled by platforms such as PayPal, Stripe, Etsy, or Uber.

Here’s what the 1099-K reporting requirements look like:

• Box 1a: Total gross reportable payment card/third-party network payments for goods or services. Gross means before fees, refunds, chargebacks, shipping, or other adjustments.
• Boxes 5a-5l: Monthly gross amounts (January–December) that sum to Box 1a; many states use monthly data to aid matching. Note that personal transfers aren’t included only payments for goods or services are reportable.
• For calendar years 2025 and later, Form 1099-K is required only if both conditions are met: more than $20,000 in gross payments and more than 200 transactions to a payee for the year. (This reverses the phased-in $5,000/$2,500/$600 plan.)
• Each platform is evaluated separately, meaning transactions can’t be combined across apps or providers.
• Several jurisdictions keep lower state-level thresholds (for example, Massachusetts $600; Virginia $600). Always verify the payee’s state rules.

Note: The IRS initially planned lower 1099-K thresholds ($5,000 for 2024, $2,500 for 2025, then $600). But as of Oct 23, 2025, the rule was changed back: starting with calendar year 2025, the old federal threshold applies over $20,000 and more than 200 transactions.

Why the Difference Between 1099-K and 1099-MISC Matters

The IRS instructs payers not to report payments that the payment-card/TPSO entity must report on Form 1099-K to avoid duplicate reporting, which can leave recipients scrambling to fix their tax returns because the duplicate reporting can make income look overstated.

At the same time, it is important to know that failing to file a required 1099 may cost $60 to $340 per return, depending on how late it’s filed, or at least $680 per return if the IRS deems it as intentional disregard.

So, understanding the differences is really important. Here’s a simple way to remember who files what and which form to use:

• When payments are routed through a card processor or third-party platform, the payment settlement entity files Form 1099-K. Payers should not file a 1099-MISC/NEC for those same card/TPSO payments.
• When payments are made directly by the business (for example, cash, check, ACH), the payer files Form 1099-MISC if the amount/category requires it.

1099-K vs 1099-MISC: Key Differences at a Glance

While both fall under the 1099 series, they serve different purposes. Here’s a quick payer reference guide:

Threshold and Exception Rules

Here are some key pointers to be mindful of while filing 1099-K and 1099-MISC:

Form 1099-K

• Federal threshold: You file only when both conditions of Form 1099-K threshold (2026) are met for each platform: more than $20,000 paid and more than 200 transactions to the same payee in the year.
• Who files: The payment settlement entity (the card processor or TPSO). Marketplace or split-payout arrangements don’t change who has the filing duty.
• State rules: Some states use lower thresholds (for example, $600). In those states, you may need to file a state 1099-K even when no federal 1099-K is required. If both state and federal rules are triggered, file at both levels.
• Avoid double-filing: Payers should not file 1099-MISC (or NEC) for the same card/TPSO payments that will be reported on a 1099-K.

Form 1099-MISC

• When it applies: Use 1099-MISC for direct payments you make by cash, check, or ACH in these categories: rents (Box 1), prizes/awards (Box 3), medical & health care payments (Box 6), attorney gross proceeds (Box 10).
• Thresholds: Generally, you need to file at $600 or more per payee in a reportable category; the royalties threshold is $10. If any 24% backup withholding was taken, you must file even if the amount is below the threshold.
• State exceptions: States can have their own rules. Many participate in the IRS Combined Federal/State Filing (CF/SF) program (the IRS forwards your federal 1099-MISC data), but participation varies by state and form. Some states still require you to file directly especially when state income tax was withheld on the payment. Always check the recipient’s state instructions each year.
• Avoid double reporting: Do not put card/TPSO payments on 1099-MISC (those belong on 1099-K). Also, don’t duplicate amounts that belong on other forms, such as 1099-NEC, 1099-INT, 1099-DIV, or 1099-R.

1099-K or 1099-MISC? A Simple Decision Flow

Here’s a simple decision flow to help you understand which form 1099-K or 1099-K applies:

Step 1: Ask: Did the payment go through a card processor or a third-party platform (TPSO) like PayPal or Stripe? If yes, review 1099-K rules/thresholds. If no (i.e., not card and not TPSO), go to Step 2.

Step 2: If the payment was made directly by your business (check/ACH/cash), first screen for payments for services by nonemployees. Those belong on Form 1099-NEC.

Step 3: For non-service direct payments e.g., rents (Box 1), prizes/awards (Box 3), medical & health care payments (Box 6), attorney gross proceeds (Box 10) file Form 1099-MISC when thresholds apply (generally $600; $10 for royalties).

Note: Do not report card/TPSO payments on 1099-MISC; those are 1099-K items.

Real-World Scenarios

To understand more closely when a payer files 1099-MISC and when a payment falls under 1099-K reporting requirements, see how the rules apply in everyday payer situations:

Common Filing Mistakes and Quick Fixes

Mistakes can be costly and stressful. Here are some common mistakes that payers make and ways to avoid or fix them:

FAQs

1. Can one recipient get both 1099-K and 1099-MISC forms?

Yes but only for different payment types and when each form’s rules are met separately (e.g., platform/card payments on 1099-K and direct payments like rent or prizes on 1099-MISC). Do not report the same dollars on both forms.

2. Are personal gifts or reimbursements via apps reportable?

No. 1099-K covers payments for goods or services. Personal gifts, cost-sharing, or reimbursements aren’t reportable on 1099-K.

3. Is the 1099-MISC threshold increasing in 2026?

No. Form 1099-MISC thresholds remain $600 (most categories) and $10 (royalties) they don’t index for inflation.

4. How should a payer report split settlements between client and attorney?

If the attorney was paid as an intermediary, the gross proceeds are reported on Form 1099-MISC, Box 10. For payments directly to the claimant, taxable amounts should be reported on 1099-MISC, Box 3. If the client’s amount is nontaxable (e.g., compensatory damages for physical injury), there is no need to file a 1099 for that part.

5. What if a payer misses the filing deadline?

File as soon as possible. Penalties increase the later you file (tiers apply at 30 days, by Aug. 1, and after Aug. 1). Intentional disregard is at least $680 per return with no max.

6. Can a payer file below thresholds voluntarily?

You can, but only if it’s correct and won’t duplicate another form (like a 1099-K). Unnecessary filings can cause confusion.

Closing Thoughts

For payers, getting 1099-K vs 1099-MISC right is more than compliance; it’s protection against mismatched records and unnecessary IRS correspondence.

Remember:

• Use 1099-K for third-party or platform-settled transactions.
• Use 1099-MISC for direct payments like rents, prizes, or legal fees.

Accuracy and timing protect payers from penalties and mismatched records. 1099Online makes both effortless with secure uploads, built-in TIN checks, and instant IRS submission.