If you run an online store on Shopify and are based in the United States, you might be wondering, “Will Shopify send me a 1099?” Understanding tax forms is crucial for e-commerce businesses, especially when it comes to reporting income. A 1099 form is used to report various types of income to the IRS, including payments made through third-party networks. In this article, we’ll clarify under what circumstances Shopify or its payment processor will send you a 1099 form, and what you need to know about reporting your income.
What is a 1099 Form?
A 1099 form is a tax document used to report income that’s not from wages, salaries, or tips. There are several types of 1099 forms, but for online sellers, the most relevant one is the 1099-K. The 1099-K form reports payments received from credit cards and third-party payment networks, such as Shopify Payments, PayPal, and Stripe. If you meet certain thresholds, you may receive a 1099-K form, which helps the IRS keep track of the income you earned from online sales.
Does Shopify Send a 1099-K?
Shopify itself does not directly send you a 1099-K form. Instead, if you use Shopify Payments as your payment processor, Shopify’s payment partner, Stripe, will handle sending the 1099-K form if you meet the IRS’s reporting threshold. For other payment processors like PayPal or third-party gateways, those platforms are responsible for sending out the 1099-K forms.
What Are the 1099-K Reporting Thresholds?
The IRS requires third-party payment processors to issue a 1099-K form if the following criteria are met:
- $600 threshold: Beginning in 2022, the IRS lowered the reporting threshold to $600 in total payments, regardless of the number of transactions. If you earn $600 or more through Shopify Payments, Stripe will send you a 1099-K form.
- Previously, the threshold was $20,000 and 200 transactions, but this was significantly reduced for more comprehensive income reporting.
If you use multiple payment processors, each of them will independently track your earnings, and you may receive multiple 1099-K forms if you exceed the $600 threshold with each processor.
Where to Find Your 1099-K on Shopify
If you use Shopify Payments and qualify for a 1099-K, Stripe will issue the form to you by January 31st of the following tax year. You can usually access your 1099-K form directly through your Shopify Admin. Here’s how to find it:
- Log in to your Shopify Admin account.
- Go to the Payments section.
- Select Documents, and you should see your 1099-K form if it has been issued.
- Download the form for your tax records.
If you don’t see the form by the end of January and believe you meet the reporting threshold, contact Shopify support or Stripe for further assistance.
Do I Need to Report Income If I Don’t Receive a 1099-K?
Yes, even if you don’t receive a 1099-K form from Shopify Payments or other payment processors, you are still required by law to report all income earned through your e-commerce store. The IRS expects you to report any earnings, regardless of whether a 1099-K form is issued. Therefore, keeping accurate records of your sales, expenses, and profits throughout the year is essential for tax compliance.
It’s a good idea to consult with an accountant or tax professional to ensure you are correctly reporting all income and taking advantage of any potential deductions, such as costs for products, shipping fees, and platform subscriptions like Shopify’s.
What About Other Payment Gateways?
If you use payment gateways outside of Shopify Payments—such as PayPal, Square, or other third-party providers—those companies will be responsible for issuing a 1099-K if you meet the reporting thresholds. Each payment processor tracks your earnings separately, so you may receive a 1099-K from each provider if your total payments exceed $600 with them.
Conclusion
Will Shopify send me a 1099? The answer is yes, but only through its payment processor, Shopify Payments (handled by Stripe), and only if you meet the IRS reporting threshold of $600 or more in payments. If you use other payment gateways, such as PayPal, those companies will also issue 1099-K forms if you meet the threshold. Regardless of whether you receive a 1099-K, it’s crucial to report all income from your Shopify store to stay compliant with tax laws.
By staying informed and keeping detailed financial records, you can avoid tax issues and ensure you accurately report your Shopify earnings to the IRS.
