Using WePay does not necessarily affect your taxes. WePay helps you organize your payments and under certain circumstances will issue you Form 1099-K, a requirement from the IRS.
What is Form 1099-K and what does it contain?
Form 1099-K is the IRS’s information return for reporting the movement of funds. It reflects the gross dollar amount that you collected in the previous calendar year. In addition, the IRS 1099-K form should reflect your legal name and Taxpayer Identification Number (TIN). It is up to you (and your tax professional) to determine whether these amounts represent taxable income.
When will WePay send me the form?
If you collect at least $20,000 and have at least 200 transactions in the calendar year, WePay will send you the 1099-K form by January 31 of the following year. All payment processors are required to issue the 1099-K form by law. WePay is also required to file a corresponding tax form with the IRS, which participates in a combined filing program with many state tax agencies.
I received only gifts and donations. Will I receive a Form 1099-K?
As of 2015, the IRS has clarified that WePay is not required to send a Form 1099-K with respect to payments that are made solely as gifts or donations. The purpose of Form 1099-K is to report payments for the provision of goods or services, which may be subject to tax. Gifts and donations typically are not reported as income by recipients, so it is not necessary to send them a Form 1099-K.
We are a business or non-profit. Do these thresholds apply to us as well?
Yes, these thresholds apply to all US-based businesses including non-profits and other tax-exempt entities. However, the 1099-K form will be sent with the name and Taxpayer Identification Number (TIN) of your business or non-profit, rather than the WePay account’s administrator’s legal name and social security number.
In other words, if you are an administrator of a WePay account for a business or non-profit, you will not take on any tax liability on behalf of the business or non-profit under your own social security number, as long as you input the correct name and employer identification number for the business or nonprofit into WePay
Are refunds and fees included in the $20,000?
When determining whether you have received more than $20,000, WePay does not deduct refunds or fees. Gross payment volume is determined by the amount of money your customers originally paid.
How should I use the information from the 1099-K form?
It is up to you (and a tax professional) to determine whether your proceeds represent taxable income. WePay will not report the funds that you collected as earned income. The 1099-K form is simply intended to track the movement of funds.
I am not a US citizen or a permanent resident. Will I get the 1099-K form from WePay?
If you are subject to tax in the United States, and you meet the requirements of at least $20,000 collected and at least 200 transactions in a calendar year you will receive the Form 1099-K.
If you reside in Canada or another foreign country and are not subject to tax in the United States but process funds in US dollars, you will need to submit a Form W-8-BEN-E to WePay.
If you reside in Canada or another foreign country but do not process funds in US dollars, you will not receive a Form 1099-K.