# The 1099-K from my payment processor is much higher than the sales in my books — how do I reconcile the two?

- **[United States (US federal tax administration; IRS guidance for US federal income tax returns) · Recipients (payees) of a Form 1099-K]** The gross payment amount is not adjusted for fees, credits, refunds, shipping, cash equivalents or discounts; the IRS states these listed items are not taxable income and that the payee can deduct them from the gross amount, and directs the payee to check their records. → [CG-MCE-045#S04](#s-CG-MCE-045-S04)
- **[Square (Block, Inc.) payments platform and Square Dashboard · Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09 · United States · U.S. Square (Block, Inc.) account holders]** Square states that Box 1a of the Form 1099-K reflects gross sales before adjustments and so is not reduced for processing fees, refunds or chargebacks, credits or discounts, shipping, or other adjustments — so these processor-side deductions sit outside the reported figure. → [CG-MCE-045#S07](#s-CG-MCE-045-S07)
- **[Square (Block, Inc.) payments platform and Square Dashboard · Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09 · United States · U.S. Square (Block, Inc.) account holders]** Square states that the amount reported on Form 1099-K may be higher than the recipient's taxable income, because some included amounts — such as taxes, tips, or refunded transactions — may not be income the recipient ultimately keeps. → [CG-MCE-045#S29](#s-CG-MCE-045-S29)
- **[United States (US federal tax administration; IRS guidance for US federal income tax returns) · Recipients (payees) of a Form 1099-K]** The payee is directed to use their records to confirm that the gross payment amount is accurate. → [CG-MCE-045#S23](#s-CG-MCE-045-S23)

## What this page establishes

- What the information return reports, and which payments one return covers — Established
- Processor-side deductions that sit outside the reported figure, and the reports that show them — Partly established
- How the books must carry processing fees, pass-through amounts and recorded revenue — Partly established (Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference.)
- Substantiating the reconciliation from the business's own records — Partly established
- The route to a corrected information return — Partly established
- What the reported figure actually measures — and why it is not your sales — Established (Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: high quality professional secondary reference, official platform documentation, primary regulator or government.)
- The differences that recur every year, and the processor report that exposes each one — Partly established
- Timing: transaction date, settlement date and the year-end cut-off — Established (Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: official platform documentation, primary regulator or government.)
- Gross sales with fees shown separately, or only the net deposit — and what has to be rebuilt — Not established (Required authority: authoritative professional or accounting standard, official platform documentation. Highest achieved: high quality professional secondary reference, primary regulator or government.)
- When the reported figure covers more than this business — Established (Required authority: official platform documentation, primary regulator or government. Highest achieved: official platform documentation, primary regulator or government.)
- Building the schedule: from the reported gross down to recorded revenue — Partly established
- When the 1099-K itself is wrong, or is not yours — Established (Required authority: primary regulator or government. Highest achieved: official platform documentation.)
- What to keep so the difference can be explained later — Partly established
- Correcting the books, versus moving revenue so it matches the form — Not established

## What the reported figure actually measures — and why it is not your sales
<a id="need-CG-MCE-045-P1"></a>

- <a id="s-CG-MCE-045-S01"></a>Form 1099-K reports payments the recipient received for goods or services during the year from payment cards (credit, debit or stored value cards, such as gift cards) and from payment apps or online marketplaces, which the page also calls third party settlement organizations (TPSOs). _(jurisdiction: United States (federal tax administration), entity_scope: Recipients of payments for goods or services reportable on Form 1099-K under US federal information reporting)_ `CG-MCE-045#S01`
  > “ Form 1099-K is a report of payments you received for goods or services during the year from:
 Credit, debit or stored value cards such as gift cards (payment cards)
 Payment apps or online marketplaces, also called third party settlement organizations or TPSOs” — [Internal Revenue Service — Understanding your Form 1099-K](https://www.irs.gov/businesses/understanding-your-form-1099-k), 2026-06-28; Introduction (page opening, above "On this page"), under heading "Understanding your Form 1099-K". Verified 2026-09-09.

- <a id="s-CG-MCE-045-S02"></a>For purposes of this section, gross amount means the total dollar amount of aggregate 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, and the dollar amount of each transaction is determined on the date of the transaction. _(jurisdiction: United States (federal; Internal Revenue Code / Treasury regulations), entity_scope: Payment settlement entities (merchant acquiring entities and third party settlement organizations), electronic payment facilitators, and their participating payees, effective_from: 2011-01-01 (returns for calendar years beginning after December 31, 2010, per paragraph (j)))_ `CG-MCE-045#S02`
  > “For purposes of this section, gross amount means the total dollar amount of aggregate 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. The dollar amount of each transaction is determined on the date of the transaction.” — [Office of the Federal Register / U.S. Government Publishing Office (Internal Revenue Service, Treasury) — 26 CFR 1.6050W-1 — Information reporting for payments made in settlement of payment card and third party network transactions](https://www.govinfo.gov/content/pkg/CFR-2025-title26-vol15/pdf/CFR-2025-title26-vol15-sec1-6050W-1.pdf), 2025-04-01; § 1.6050W–1(a)(6) Gross amount (p. 568). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S03"></a>For each participating payee the return sets out the gross amount (as defined in paragraph (a)(6)) of the aggregate reportable payment transactions for the calendar year and of the aggregate reportable payment transactions for each month of that calendar year. _(jurisdiction: United States (federal; Internal Revenue Code / Treasury regulations), entity_scope: Payment settlement entities (merchant acquiring entities and third party settlement organizations), electronic payment facilitators, and their participating payees, effective_from: 2011-01-01 (returns for calendar years beginning after December 31, 2010, per paragraph (j)))_ `CG-MCE-045#S03`
  > “(ii) With respect to each participating payee, the gross amount, as defined in paragraph (a)(6) of this section, of— (A) The aggregate reportable payment transactions for the calendar year; and (B) The aggregate reportable payment transactions for each month of the calendar year.” — [Office of the Federal Register / U.S. Government Publishing Office (Internal Revenue Service, Treasury) — 26 CFR 1.6050W-1 — Information reporting for payments made in settlement of payment card and third party network transactions](https://www.govinfo.gov/content/pkg/CFR-2025-title26-vol15/pdf/CFR-2025-title26-vol15-sec1-6050W-1.pdf), 2025-04-01; § 1.6050W–1(a)(1)(ii)(A)–(B) (p. 567). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S04"></a>The gross payment amount is not adjusted for fees, credits, refunds, shipping, cash equivalents or discounts; the IRS states these listed items are not taxable income and that the payee can deduct them from the gross amount, and directs the payee to check their records. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K)_ `CG-MCE-045#S04`
  > “The gross payment amount isn't adjusted for any:
 Fees
 Credits
 Refunds
 Shipping
 Cash equivalents
 Discounts
 These items are not taxable income. You can deduct them from the gross amount. Check your records.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "Check the information on the form", sub-heading "Gross payment amount (Box 1a)". Verified 2026-09-09.

- <a id="s-CG-MCE-045-S05"></a>Square states that the Form 1099-K it issues reports the gross payment amount in Box 1a and the number of reportable payment transactions for the calendar year, calculated on the transaction dates of the seller's sales and reflecting the total dollar value of reportable card payments processed in that period. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: figures computed by calendar year; computed on transaction date, not settlement date)_ `CG-MCE-045#S05`
  > “Form 1099-K reports your gross payment amount (Box 1a) and the number of reportable payment transactions for the calendar year. These figures are calculated based on the transaction dates of your sales and reflect the total dollar value of reportable card payments processed during that period.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Understand how amounts on Form 1099-K are calculated”, first paragraph (TEXT.txt line 49). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S06"></a>The article states that recording revenue at gross means recording the revenue from a sale transaction on the income statement, describes this as the most common revenue recognition arrangement, and says it is used when the seller has full responsibility for the goods or services being sold and for completion of any contract terms associated with the sale. _(jurisdiction: United States, entity_scope: A business deciding whether to report revenue at gross or at net on its income statement, accounting_basis: US GAAP (EITF Issue 99-19 / ASC 606 framework as described by the article), conditions: Seller has full responsibility for the goods or services sold and for completion of any associated contract terms)_ `CG-MCE-045#S06`
  > “Recording revenue at gross means that you record the revenue from a sale transaction on the income statement . This is the most common revenue recognition arrangement, and is used when you have full responsibility for the goods or services being sold, and for the completion of any contract terms associated with the sale.” — [AccountingTools, Inc. (Steven Bragg) — Revenue at gross or net](https://www.accountingtools.com/articles/revenue-at-gross-or-net), 2026-03-15; Article body, section heading “What is Revenue at Gross?”. Verified 2026-09-09.

_Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: high quality professional secondary reference, official platform documentation, primary regulator or government._

## The differences that recur every year, and the processor report that exposes each one
<a id="need-CG-MCE-045-P2"></a>

- See above: For purposes of this section, gross amount means the total dollar amount of aggregate 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, and the dollar amount of each transaction is determined on the date of the transaction. ([CG-MCE-045#S02](#s-CG-MCE-045-S02))

- <a id="s-CG-MCE-045-S07"></a>Square states that Box 1a of the Form 1099-K reflects gross sales before adjustments and so is not reduced for processing fees, refunds or chargebacks, credits or discounts, shipping, or other adjustments — so these processor-side deductions sit outside the reported figure. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: applies to Box 1a of the Square-issued Form 1099-K; list ends with an open 'Other adjustments' item)_ `CG-MCE-045#S07`
  > “Box 1a reflects gross sales before adjustments, so it is not reduced for:
 Processing fees
 Refunds or chargebacks
 Credits or discounts
 Shipping
 Other adjustments” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Understand how amounts on Form 1099-K are calculated”, bulleted list following “Box 1a reflects gross sales before adjustments” (TEXT.txt lines 56–61). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S08"></a>Square states that the gross payment amounts on Form 1099-K generally include, among other items, credit and debit card payments, gift card payments where applicable, Cash App Pay transactions where applicable, taxes and tips collected on card transactions, and revenue from card payments that were later refunded. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: list is stated as what gross payment amounts 'generally' include, not as exhaustive; gift card payments and Cash App Pay 'if applicable')_ `CG-MCE-045#S08`
  > “Gross payment amounts generally include:
 Credit and debit card payments
 Gift card payments (if applicable)
 Cash App Pay transactions (if applicable)
 Taxes and tips collected on card transactions
 Revenue from card payments that were later refunded” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Understand how amounts on Form 1099-K are calculated”, bulleted list “Gross payment amounts generally include” (TEXT.txt lines 50–55). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S09"></a>Square attributes the difference between the Form 1099-K amount and the amount settled in the seller's bank account to refunds, chargebacks or holds the seller may have had, and to Square fees having been deducted before funds were transferred to the bank. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: refunds, chargebacks or holds are stated as things the seller 'may have had'; Square fees deducted before transfer to the seller's bank)_ `CG-MCE-045#S09`
  > “This difference is because you may have had refunds, chargebacks, or holds, and your Square fees were deducted before funds were transferred to your bank.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Understand how amounts on Form 1099-K are calculated”, sentence following “Cash sales are not included…” (TEXT.txt line 63). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S10"></a>Square states that a seller can use the Payment Methods report in the Square Dashboard to verify the total amount reported on the Form 1099-K. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: Payment Methods report in the Square Dashboard)_ `CG-MCE-045#S10`
  > “You can use the Payment Methods report in your Square Dashboard to verify the total amount reported on your Form 1099-K.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Reconcile your Form 1099-K”, opening line (TEXT.txt line 66). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S11"></a>PayPal states that, as a courtesy, it provides an option to request a Reconciliation Report listing all of the transactions PayPal included in the calculation of the account holder's total gross sales for goods or services reported on their Form 1099-K, and that this includes transactions received through PayPal in the previous calendar year. _(jurisdiction: United States, entity_scope: Holders of a PayPal account that were issued a Form 1099-K by PayPal, platform: PayPal, platform_edition: PayPal US Help Center article (undated; PayPal US site, © 1999–2026), conditions: Report is provided as a courtesy and must be requested; Covers the previous calendar year)_ `CG-MCE-045#S11`
  > “As a courtesy, PayPal provides an option to request a
Reconciliation Report that lists all of the transactions we included in the
calculation of your total gross sales for goods or services reported on your
Form 1099-K. This includes transactions you received through PayPal in the
previous calendar year.” — [PayPal Holdings, Inc. (PayPal US Help Center) — What if the amount reported on my Form 1099-K is incorrect?](https://www.paypal.com/us/cshelp/article/what-if-the-amount-reported-on-my-form-1099-k-is-incorrect-help554), Undated PayPal US Help Center article (help554); PayPal US site, © 1999–2026; content as pinned at fetch (September 2026); Article body, under the page heading “What if the amount reported on my Form 1099-K is incorrect?” — first body paragraph after the tax-advice disclaimer (TEXT.txt lines 84–88). Verified 2026-09-09.

_Partly established. Established: amounts withheld before deposit as a recurring category of reconciling difference (S07, S09); refunded and reversed transactions as a recurring category of reconciling difference (S02, S07, S08, S09, S29); amounts collected on behalf of other parties as a recurring category of reconciling difference (S17); non-revenue receipts as a recurring category of reconciling difference (S24, S29). Missing: which processor-side report exposes each category._

## Timing: transaction date, settlement date and the year-end cut-off
<a id="need-CG-MCE-045-P3"></a>

- See above: For each participating payee the return sets out the gross amount (as defined in paragraph (a)(6)) of the aggregate reportable payment transactions for the calendar year and of the aggregate reportable payment transactions for each month of that calendar year. ([CG-MCE-045#S03](#s-CG-MCE-045-S03))

- See above: Square states that the Form 1099-K it issues reports the gross payment amount in Box 1a and the number of reportable payment transactions for the calendar year, calculated on the transaction dates of the seller's sales and reflecting the total dollar value of reportable card payments processed in that period. ([CG-MCE-045#S05](#s-CG-MCE-045-S05))

- <a id="s-CG-MCE-045-S12"></a>In this worked example, where a $100 card purchase on Day 1 is settled on Day 2 by a payment of $98 after $2 of fees are deducted, the merchant acquiring entity must report $100 — the amount of the transaction on Day 1, without any reduction for fees or any other amount — as the gross amount on the annual information return. _(jurisdiction: United States (federal; Internal Revenue Code / Treasury regulations), entity_scope: Payment settlement entities (merchant acquiring entities and third party settlement organizations), electronic payment facilitators, and their participating payees, effective_from: 2011-01-01 (returns for calendar years beginning after December 31, 2010, per paragraph (j)))_ `CG-MCE-045#S12`
  > “Example 5. Gross amount. On Day 1, Customer A uses a payment card to purchase $100 worth of goods from merchant B. Bank X, the merchant acquiring entity for B, is the party with the contractual obligation to make payment to B in settlement of the transaction. On Day 2, X, after deducting fees of $2, makes payment of $98 to settle the transaction for the sale of goods from B to A. Under paragraph (a)(6) of this section, X must report the amount of $100, the amount of the transaction on Day 1, without any reduction for fees or any other amount, as the gross amount of this reportable payment transaction on the annual information return filed under paragraph (a)(1) of this section.” — [Office of the Federal Register / U.S. Government Publishing Office (Internal Revenue Service, Treasury) — 26 CFR 1.6050W-1 — Information reporting for payments made in settlement of payment card and third party network transactions](https://www.govinfo.gov/content/pkg/CFR-2025-title26-vol15/pdf/CFR-2025-title26-vol15-sec1-6050W-1.pdf), 2025-04-01; § 1.6050W–1(e) Examples — Example 5. Gross amount (p. 573). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S13"></a>Square states that the transaction date used is the date in Square's system based on Coordinated Universal Time, while the Square Dashboard displays transactions in the seller's local time, so there may be small differences for transactions occurring after 4 PM or 5 PM (depending on daylight saving time) or after midnight local time. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: differences described as 'small' and as a possibility; affects transactions late in the local day)_ `CG-MCE-045#S13`
  > “The transaction date is the date in our system that the transaction took place, which is based on a standardized time known as Coordinated Universal Time (UTC). Your Square Dashboard shows your transactions in your local time, so there may be small differences if you have transactions that occur after either 4 PM or 5 PM (depending on daylight saving time) or after midnight in your local time zone.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Understand how amounts on Form 1099-K are calculated”, final paragraph (TEXT.txt line 64). Verified 2026-09-09.

_Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: official platform documentation, primary regulator or government._

## Gross sales with fees shown separately, or only the net deposit — and what has to be rebuilt
<a id="need-CG-MCE-045-P4"></a>

- See above: The article states that recording revenue at gross means recording the revenue from a sale transaction on the income statement, describes this as the most common revenue recognition arrangement, and says it is used when the seller has full responsibility for the goods or services being sold and for completion of any contract terms associated with the sale. ([CG-MCE-045#S06](#s-CG-MCE-045-S06))

- See above: Square attributes the difference between the Form 1099-K amount and the amount settled in the seller's bank account to refunds, chargebacks or holds the seller may have had, and to Square fees having been deducted before funds were transferred to the bank. ([CG-MCE-045#S09](#s-CG-MCE-045-S09))

- See above: In this worked example, where a $100 card purchase on Day 1 is settled on Day 2 by a payment of $98 after $2 of fees are deducted, the merchant acquiring entity must report $100 — the amount of the transaction on Day 1, without any reduction for fees or any other amount — as the gross amount on the annual information return. ([CG-MCE-045#S12](#s-CG-MCE-045-S12))

- <a id="s-CG-MCE-045-S14"></a>The article states that resellers typically report gross revenue when they act as the principal in a transaction, that under revenue recognition guidance (ASC 606) this occurs when the reseller controls the goods before transferring them to the customer, and that a reseller acting only as an agent arranging a sale for another party reports net revenue. _(jurisdiction: United States, entity_scope: Resellers, accounting_basis: US GAAP (EITF Issue 99-19 / ASC 606 framework as described by the article), conditions: Principal case: reseller controls the goods before transferring them to the customer; Agent case: reseller only arranges a sale for another party)_ `CG-MCE-045#S14`
  > “Resellers typically report gross revenue when they act as the principal in a transaction. Under revenue recognition guidance (ASC 606), this occurs when the reseller controls the goods before transferring them to the customer. If the reseller acts only as an agent, arranging a sale for another party, it reports net revenue.” — [AccountingTools, Inc. (Steven Bragg) — Revenue at gross or net](https://www.accountingtools.com/articles/revenue-at-gross-or-net), 2026-03-15; Article body, section heading “FAQs”, question “Do resellers report gross or net revenue?”. Verified 2026-09-09.

- <a id="s-CG-MCE-045-S15"></a>Square states that a seller who does not qualify for a Form 1099-K can still review their yearly sales summary and card processing fees from the Square Dashboard. _(jurisdiction: United States, entity_scope: U.S. Square account holders who do not qualify for a Form 1099-K, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: seller does not qualify for a Form 1099-K)_ `CG-MCE-045#S15`
  > “If you don’t qualify for a Form 1099-K, you can still review your yearly sales summary and card processing fees from your Square Dashboard.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Download Form 1099-K”, first paragraph (TEXT.txt line 76). Verified 2026-09-09.

_Not established from an authoritative source._

_Required authority: authoritative professional or accounting standard, official platform documentation. Highest achieved: high quality professional secondary reference, primary regulator or government._

## When the reported figure covers more than this business
<a id="need-CG-MCE-045-P5"></a>

- <a id="s-CG-MCE-045-S16"></a>A payee who accepts payments on different platforms could get more than one Form 1099-K. _(jurisdiction: United States (federal tax administration), entity_scope: US payees accepting payments on more than one platform, conditions: payments accepted on different platforms)_ `CG-MCE-045#S16`
  > “If you accept payments on different platforms, you could get more than one Form 1099-K.” — [Internal Revenue Service — Understanding your Form 1099-K](https://www.irs.gov/businesses/understanding-your-form-1099-k), 2026-06-28; Section "Who gets Form 1099-K" > subheading "If you used a payment app or online marketplace", sentence following the bulleted list of platforms. Verified 2026-09-09.

- <a id="s-CG-MCE-045-S17"></a>If the recipient shared their credit card terminal with another person or business, their Form 1099-K will include payment card transactions that belong to that other person or business in addition to the recipient's own payments. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K, conditions: Recipient shared a credit card terminal with another person or business)_ `CG-MCE-045#S17`
  > “If you shared your credit card terminal with another person or business, your  Form 1099-K  will include payment card transactions that belong to them, plus your own payments.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If the gross amount should be shared", sub-heading "Shared credit card terminal". Verified 2026-09-09.

- <a id="s-CG-MCE-045-S18"></a>In the IRS's example, a person operating a retail business as a sole proprietor who also has rental income and accepts payment cards for both, processing the payments on one terminal, would have a Form 1099-K that includes gross payment amounts for both businesses. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K with more than one business on one terminal, conditions: Payments for both activities processed on one terminal; Stated as an example)_ `CG-MCE-045#S18`
  > “For example, you may operate a retail business as a sole proprietor and have rental income. You may accept payment cards for both businesses. If you process the payments on one terminal, your  Form 1099-K  would include gross payment amounts for both businesses.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If the gross amount should be shared", sub-heading "Multiple sources of business income". Verified 2026-09-09.

- <a id="s-CG-MCE-045-S19"></a>Money received from friends and family as a gift or as repayment for a personal expense should not be reported on a Form 1099-K, and such payments are not taxable income. _(jurisdiction: United States (federal tax administration), entity_scope: US payees receiving personal, non-business payments from friends and family, conditions: payment is a gift or repayment for a personal expense from friends or family)_ `CG-MCE-045#S19`
  > “Money you received from friends and family as a gift or repayment for a personal expense should not be reported on a Form 1099-K. These payments aren't taxable income.” — [Internal Revenue Service — Understanding your Form 1099-K](https://www.irs.gov/businesses/understanding-your-form-1099-k), 2026-06-28; Section "Personal payments from family and friends", first paragraph. Verified 2026-09-09.

- <a id="s-CG-MCE-045-S20"></a>Square states that its Form 1099-K reporting thresholds are based on the aggregate gross sales volume processed on all Square accounts using the same Tax Identification Number, and that where a holder has multiple accounts on the same TIN Square aggregates the volume across all of them to test qualification; a TIN can be an EIN, SSN or ITIN. _(jurisdiction: United States, entity_scope: U.S. Square account holders with one or more accounts under the same Tax Identification Number, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: applies to the reporting thresholds described in this article; multiple accounts sharing one TIN)_ `CG-MCE-045#S20`
  > “These reporting thresholds are based on the aggregate gross sales volume processed on all accounts using the same Tax Identification Number (TIN). A TIN can be the business Employer Identification Number (EIN), Social Security Number (SSN) or Individual Tax identification Number (ITIN). If you have multiple accounts that use the same TIN, we will aggregate the volume for all accounts to see if you qualify for a Form 1099-K.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “About Form 1099-K”, paragraph following the state threshold lists (TEXT.txt line 40). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S21"></a>PayPal states that it does not report payments such as personal payments sent to family or friends; the payments named are given as examples rather than as a closed list. _(jurisdiction: United States, entity_scope: Payments received through a PayPal account, platform: PayPal, platform_edition: PayPal US Help Center article (undated; PayPal US site, © 1999–2026))_ `CG-MCE-045#S21`
  > “We don’t
report payments such as personal payments sent to family or friends.” — [PayPal Holdings, Inc. (PayPal US Help Center) — What if the amount reported on my Form 1099-K is incorrect?](https://www.paypal.com/us/cshelp/article/what-if-the-amount-reported-on-my-form-1099-k-is-incorrect-help554), Undated PayPal US Help Center article (help554); PayPal US site, © 1999–2026; content as pinned at fetch (September 2026); Article body, under the page heading “What if the amount reported on my Form 1099-K is incorrect?” — sixth (final) body paragraph (TEXT.txt lines 96–97). Verified 2026-09-09.

_Required authority: official platform documentation, primary regulator or government. Highest achieved: official platform documentation, primary regulator or government._

## Building the schedule: from the reported gross down to recorded revenue
<a id="need-CG-MCE-045-P6"></a>

- See above: The gross payment amount is not adjusted for fees, credits, refunds, shipping, cash equivalents or discounts; the IRS states these listed items are not taxable income and that the payee can deduct them from the gross amount, and directs the payee to check their records. ([CG-MCE-045#S04](#s-CG-MCE-045-S04))

- <a id="s-CG-MCE-045-S22"></a>The payee is directed to use their records to check for expenses they can deduct from the gross amount, the parenthetical naming fees, credits, refunds, shipping, cash equivalents or discounts. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K)_ `CG-MCE-045#S22`
  > “Check for expenses you can deduct from the gross amount (fees, credits, refunds, shipping, cash equivalents or discounts).” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "Check your records", second bullet. Verified 2026-09-09.

- <a id="s-CG-MCE-045-S23"></a>The payee is directed to use their records to confirm that the gross payment amount is accurate. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K)_ `CG-MCE-045#S23`
  > “Confirm the gross payment amount is accurate. If it's not, take these steps .” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "Check your records", first bullet. Verified 2026-09-09.

- <a id="s-CG-MCE-045-S24"></a>Where a business allows customers to get cash back on their debit cards, those cash back payments will be reported on Form 1099-K; the IRS says that generally the business would not include cash back amounts as part of its gross receipts and also would not claim them as a business expense. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K who allow debit card cash back, conditions: Customers permitted to take cash back on debit cards; IRS hedges the gross-receipts and expense treatment with "Generally")_ `CG-MCE-045#S24`
  > “If you allow customers to get cash back when they use their debit cards, these payments will be reported on  Form 1099-K . Generally, you wouldn't include cash back amounts as part of your gross receipts. You also wouldn't claim them as a business expense.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If the gross amount should be shared", sub-heading "Cash back payments". Verified 2026-09-09.

- <a id="s-CG-MCE-045-S25"></a>Square states that the total under Payment amount in the Payment methods report, filtered and dated as instructed, should align with the gross amount reported on the Form 1099-K. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: report configured to UTC+00:00 reporting hours, the full calendar year of the form, and the relevant payment method filters excluding physical cash)_ `CG-MCE-045#S25`
  > “Review the total under Payment amount . This total should align with the gross amount reported on your Form 1099-K.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Reconcile your Form 1099-K”, final step (TEXT.txt line 74). Verified 2026-09-09.

- <a id="s-CG-MCE-045-S26"></a>PayPal asks the recipient to use the Reconciliation Report to validate the amounts reported on the Form 1099-K that PayPal issued to them. _(jurisdiction: United States, entity_scope: Recipients of a PayPal-issued Form 1099-K, platform: PayPal, platform_edition: PayPal US Help Center article (undated; PayPal US site, © 1999–2026))_ `CG-MCE-045#S26`
  > “Please use the Reconciliation Report to validate the
amounts reported on the Form 1099-K issued to you by PayPal.” — [PayPal Holdings, Inc. (PayPal US Help Center) — What if the amount reported on my Form 1099-K is incorrect?](https://www.paypal.com/us/cshelp/article/what-if-the-amount-reported-on-my-form-1099-k-is-incorrect-help554), Undated PayPal US Help Center article (help554); PayPal US site, © 1999–2026; content as pinned at fetch (September 2026); Article body, under the page heading “What if the amount reported on my Form 1099-K is incorrect?” — third body paragraph (TEXT.txt lines 91–92). Verified 2026-09-09.

_Partly established. Established: beginning from the reported gross (S04, S22); applying each identified reconciling item with its direction (S04, S22). Missing: arriving at the revenue recorded in the ledger; carrying forward whatever remains as an identified residual._

## Correcting the books, versus moving revenue so it matches the form
<a id="need-CG-MCE-045-P9"></a>

- See above: The payee is directed to use their records to confirm that the gross payment amount is accurate. ([CG-MCE-045#S23](#s-CG-MCE-045-S23))

- See above: Where a business allows customers to get cash back on their debit cards, those cash back payments will be reported on Form 1099-K; the IRS says that generally the business would not include cash back amounts as part of its gross receipts and also would not claim them as a business expense. ([CG-MCE-045#S24](#s-CG-MCE-045-S24))

- <a id="s-CG-MCE-045-S28"></a>The IRS states that a payment being reported on Form 1099-K does not by itself mean it is taxable, and that good recordkeeping is important to support the income and deductible expenses the taxpayer reports on their tax return. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K)_ `CG-MCE-045#S28`
  > “Just because a payment is reported on Form 1099-K doesn't mean it's taxable. Good recordkeeping  is important to support the income and deductible expenses you report on your tax return.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "Check your records", closing paragraph. Verified 2026-09-09.

- <a id="s-CG-MCE-045-S29"></a>Square states that the amount reported on Form 1099-K may be higher than the recipient's taxable income, because some included amounts — such as taxes, tips, or refunded transactions — may not be income the recipient ultimately keeps. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: stated as a possibility ('may be higher'), not as always the case; examples given are illustrative ('such as'))_ `CG-MCE-045#S29`
  > “As a result, the amount reported on Form 1099-K may be higher than your taxable income, since some included amounts (such as taxes, tips, or refunded transactions) may not be income you ultimately keep.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Understand how amounts on Form 1099-K are calculated”, paragraph after the “not reduced for” list (TEXT.txt line 62). Verified 2026-09-09.

_Not established from an authoritative source._

## When the 1099-K itself is wrong, or is not yours
<a id="need-CG-MCE-045-P7"></a>

- <a id="s-CG-MCE-045-S30"></a>A taxpayer may get a Form 1099-K when they should not have if it reports personal payments from family or friends like gifts or reimbursements, does not belong to them, or duplicates a Form 1099-K they already received; the IRS lists these cases without stating the list is exhaustive. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K)_ `CG-MCE-045#S30`
  > “You may get a Form 1099-K when you shouldn't have if it:
 Reports personal payments from family or friends like gifts or reimbursements
 Doesn't belong to you
 Duplicates a Form 1099-K you already received” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If you get a Form 1099-K when you shouldn't have". Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-045-S31"></a>To obtain a correction the payee is directed to the issuer named under "Filer" on the top left corner of Form 1099-K, and, if the issuer is not recognised, to the Payment Settlement Entity (PSE) identified on the bottom left corner of the form above the account number. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of an incorrect Form 1099-K, conditions: Payee TIN or gross payment amount is incorrect)_ `CG-MCE-045#S31`
  > “Request a corrected form from the issuer – see "Filer" on the top left corner of Form 1099-K to find the name and contact information of the issuer. If you don't recognize the issuer, contact the Payment Settlement Entity (PSE) identified on the bottom left corner of the form above your account number.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If your Form 1099-K has incorrect information", sub-heading "Request a corrected form from the issuer". Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-045-S32"></a>Where a Form 1099-K was issued that should not have been, the recipient is to ask the issuer for a corrected Form 1099-K that shows a zero amount. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients of a Form 1099-K they should not have received, conditions: Form reports personal payments, does not belong to the recipient, or duplicates another form)_ `CG-MCE-045#S32`
  > “Ask for a corrected Form 1099-K that shows a zero amount.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If you get a Form 1099-K when you shouldn't have", second step. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-045-S33"></a>Where required, the terminal holder is to file and furnish the appropriate information return (the IRS gives Form 1099-K or Form 1099-MISC as examples) for each person or business with whom the card terminal was shared, and to include the total payment card transaction amount plus any other income belonging to that other person or business. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Persons who shared a credit card terminal with another person or business, conditions: Only "where required"; Form types given as examples, not a closed list)_ `CG-MCE-045#S33`
  > “Where required, file and furnish the appropriate information return (for example, Form 1099-K or  Form 1099-MISC ) for each person or business with whom you shared a card terminal  and  include the total payment card transaction amount, plus any other income that belongs to the other person or business.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If the gross amount should be shared", sub-heading "Shared credit card terminal", "What to do". Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-045-S34"></a>PayPal asks the recipient to identify the transactions they did not receive for sales of goods or services, and states that it will need the specific transaction IDs for each payment the recipient believes PayPal should not include. _(jurisdiction: United States, entity_scope: Recipients of a PayPal-issued Form 1099-K who contact PayPal about the amounts reported, platform: PayPal, platform_edition: PayPal US Help Center article (undated; PayPal US site, © 1999–2026), conditions: Applies when the recipient raises transactions they believe should not be included)_ `CG-MCE-045#S34`
  > “Let us know the transactions that you didn’t receive for sales of goods or services. We'll need the specific transaction IDs for each payment you believe we shouldn’t include.” — [PayPal Holdings, Inc. (PayPal US Help Center) — What if the amount reported on my Form 1099-K is incorrect?](https://www.paypal.com/us/cshelp/article/what-if-the-amount-reported-on-my-form-1099-k-is-incorrect-help554), Undated PayPal US Help Center article (help554); PayPal US site, © 1999–2026; content as pinned at fetch (September 2026); Article body, under the page heading “What if the amount reported on my Form 1099-K is incorrect?” — fifth body paragraph (TEXT.txt line 94). Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Required authority: primary regulator or government. Highest achieved: official platform documentation._

## What to keep so the difference can be explained later
<a id="need-CG-MCE-045-P8"></a>

- See above: PayPal states that, as a courtesy, it provides an option to request a Reconciliation Report listing all of the transactions PayPal included in the calculation of the account holder's total gross sales for goods or services reported on their Form 1099-K, and that this includes transactions received through PayPal in the previous calendar year. ([CG-MCE-045#S11](#s-CG-MCE-045-S11))

- See above: Square states that a seller who does not qualify for a Form 1099-K can still review their yearly sales summary and card processing fees from the Square Dashboard. ([CG-MCE-045#S15](#s-CG-MCE-045-S15))

- See above: The IRS states that a payment being reported on Form 1099-K does not by itself mean it is taxable, and that good recordkeeping is important to support the income and deductible expenses the taxpayer reports on their tax return. ([CG-MCE-045#S28](#s-CG-MCE-045-S28))

- <a id="s-CG-MCE-045-S35"></a>The IRS states that the payee's records may include reports from payment apps or online marketplaces, payment card receipts or merchant statements, and directs the payee to use those records; the list is stated as one of things records "may include". _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a Form 1099-K)_ `CG-MCE-045#S35`
  > “Your records may include reports from payment apps or online marketplaces, payment card receipts or merchant statements. Use the records to:” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "Check your records", opening sentence. Verified 2026-09-09.

- <a id="s-CG-MCE-045-S36"></a>The terminal holder is to keep records of payments issued to each person or business sharing their terminal, including shared terminal written agreements and cancelled checks; the itemisation is introduced with "including". _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Persons who shared a credit card terminal with another person or business)_ `CG-MCE-045#S36`
  > “Keep records of payments issued to each person or business sharing your terminal including shared terminal written agreements and cancelled checks.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If the gross amount should be shared", sub-heading "Shared credit card terminal", "What to do". Verified 2026-09-09.

- <a id="s-CG-MCE-045-S37"></a>The business is to keep records of customer cash back activity during the year, and the IRS states that cash back activity is not taxable income. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Businesses that allow debit card cash back)_ `CG-MCE-045#S37`
  > “Keep records of customer cash back activity during the year. Cash back activity isn't taxable income.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If the gross amount should be shared", sub-heading "Cash back payments", "What to do". Verified 2026-09-09.

_Partly established. Established: the basis on which they are retained (S28). Missing: what the completed reconciliation and its supporting processor reports must contain._

## What the information return reports, and which payments one return covers
<a id="need-CG-MCE-045-C1"></a>

- See above: For purposes of this section, gross amount means the total dollar amount of aggregate 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, and the dollar amount of each transaction is determined on the date of the transaction. ([CG-MCE-045#S02](#s-CG-MCE-045-S02))

- See above: For each participating payee the return sets out the gross amount (as defined in paragraph (a)(6)) of the aggregate reportable payment transactions for the calendar year and of the aggregate reportable payment transactions for each month of that calendar year. ([CG-MCE-045#S03](#s-CG-MCE-045-S03))

- See above: A payee who accepts payments on different platforms could get more than one Form 1099-K. ([CG-MCE-045#S16](#s-CG-MCE-045-S16))

- See above: If the recipient shared their credit card terminal with another person or business, their Form 1099-K will include payment card transactions that belong to that other person or business in addition to the recipient's own payments. ([CG-MCE-045#S17](#s-CG-MCE-045-S17))

## Processor-side deductions that sit outside the reported figure, and the reports that show them
<a id="need-CG-MCE-045-C2"></a>

- See above: Square states that Box 1a of the Form 1099-K reflects gross sales before adjustments and so is not reduced for processing fees, refunds or chargebacks, credits or discounts, shipping, or other adjustments — so these processor-side deductions sit outside the reported figure. ([CG-MCE-045#S07](#s-CG-MCE-045-S07))

- See above: Square states that the gross payment amounts on Form 1099-K generally include, among other items, credit and debit card payments, gift card payments where applicable, Cash App Pay transactions where applicable, taxes and tips collected on card transactions, and revenue from card payments that were later refunded. ([CG-MCE-045#S08](#s-CG-MCE-045-S08))

- See above: Square states that a seller can use the Payment Methods report in the Square Dashboard to verify the total amount reported on the Form 1099-K. ([CG-MCE-045#S10](#s-CG-MCE-045-S10))

- <a id="s-CG-MCE-045-S39"></a>Square states that cash sales are not included in the total it reports on the Form 1099-K, so the amount shown on the form may differ from the amount settled in the seller's bank account. _(jurisdiction: United States, entity_scope: U.S. Square (Block, Inc.) account holders, platform: Square (Block, Inc.) payments platform and Square Dashboard, platform_edition: Square Support Center, United States (English); undated help-centre article, content current at fetch 2026-09-09, conditions: cash sales excluded from the reported total)_ `CG-MCE-045#S39`
  > “Cash sales are not included in the total we report on the Form 1099-K — so, the amount shown on the form may be different from the amount settled in your bank account.” — [Block, Inc. (Square Support Center, United States) — Manage your Form 1099-K](https://squareup.com/help/us/en/article/5048-1099-k-overview), Square Support Center, United States (English); undated help-centre article, © 2026 Block, Inc.; content current at fetch 2026-09-09; Section “Understand how amounts on Form 1099-K are calculated” (TEXT.txt line 63). Verified 2026-09-09.

- See above: PayPal states that, as a courtesy, it provides an option to request a Reconciliation Report listing all of the transactions PayPal included in the calculation of the account holder's total gross sales for goods or services reported on their Form 1099-K, and that this includes transactions received through PayPal in the previous calendar year. ([CG-MCE-045#S11](#s-CG-MCE-045-S11))

_Partly established. Established: which processor-side deductions and adjustments sit outside the reported figure and therefore surface as reconciling items (S07, S09). Missing: which processor reports expose each of those deductions and adjustments; the reports that identify, at transaction level, amounts settled through the account on behalf of another party; the reports that identify, at transaction level, receipts that are not sales._

## How the books must carry processing fees, pass-through amounts and recorded revenue
<a id="need-CG-MCE-045-C3"></a>

_Partly established. Established: the accounting treatment of amounts collected through a processor on behalf of another party (S14). Missing: the accounting treatment of processing fees relative to revenue; the point at which such books measure and recognise revenue, whether at the sale or on receipt; what must support a correction to recorded revenue, as distinct from an adjustment made so that recorded revenue agrees with an externally reported figure._

_Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference._

## Substantiating the reconciliation from the business's own records
<a id="need-CG-MCE-045-C4"></a>

- See above: The payee is directed to use their records to confirm that the gross payment amount is accurate. ([CG-MCE-045#S23](#s-CG-MCE-045-S23))

- See above: The IRS states that a payment being reported on Form 1099-K does not by itself mean it is taxable, and that good recordkeeping is important to support the income and deductible expenses the taxpayer reports on their tax return. ([CG-MCE-045#S28](#s-CG-MCE-045-S28))

- See above: The IRS states that the payee's records may include reports from payment apps or online marketplaces, payment card receipts or merchant statements, and directs the payee to use those records; the list is stated as one of things records "may include". ([CG-MCE-045#S35](#s-CG-MCE-045-S35))

- See above: The terminal holder is to keep records of payments issued to each person or business sharing their terminal, including shared terminal written agreements and cancelled checks; the itemisation is introduced with "including". ([CG-MCE-045#S36](#s-CG-MCE-045-S36))

_Partly established. Established: the substantiation expectation for a reconciliation between a filed information return and the taxpayer's own records (S23, S35). Missing: the retention expectation for that reconciliation; what the supporting schedule must show._

## The route to a corrected information return
<a id="need-CG-MCE-045-C5"></a>

- See above: A taxpayer may get a Form 1099-K when they should not have if it reports personal payments from family or friends like gifts or reimbursements, does not belong to them, or duplicates a Form 1099-K they already received; the IRS lists these cases without stating the list is exhaustive. ([CG-MCE-045#S30](#s-CG-MCE-045-S30))

- See above: To obtain a correction the payee is directed to the issuer named under "Filer" on the top left corner of Form 1099-K, and, if the issuer is not recognised, to the Payment Settlement Entity (PSE) identified on the bottom left corner of the form above the account number. ([CG-MCE-045#S31](#s-CG-MCE-045-S31))

- See above: Where a Form 1099-K was issued that should not have been, the recipient is to ask the issuer for a corrected Form 1099-K that shows a zero amount. ([CG-MCE-045#S32](#s-CG-MCE-045-S32))

- <a id="s-CG-MCE-045-S38"></a>The payee is to keep a copy of the corrected Form 1099-K with their records, along with any correspondence they have with the issuer or PSE. _(jurisdiction: United States (US federal tax administration; IRS guidance for US federal income tax returns), entity_scope: Recipients (payees) of a corrected Form 1099-K, conditions: A corrected form was requested from the issuer or PSE)_ `CG-MCE-045#S38`
  > “Keep a copy of the corrected Form 1099-K with your records, along with any correspondence you have with the issuer or PSE.” — [Internal Revenue Service — What to do with Form 1099-K](https://www.irs.gov/businesses/what-to-do-with-form-1099-k), 2026-07-27; Body, section "If your Form 1099-K has incorrect information", sub-heading "Request a corrected form from the issuer". Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Partly established. Established: the route by which a recipient seeks correction of an information return that is wrong or that reports activity belonging to another party (S31, S32). Missing: what the recipient must do in the meantime._

## Not yet fully established from an authoritative source

- Establish which processor-side deductions and adjustments sit outside the reported figure and therefore surface as reconciling items, and which processor reports expose each of them, together with the reports that identify, at transaction level, amounts settled through the account on behalf of another party and receipts that are not sales. _(partly established)_
- Establish the accounting treatment of processing fees relative to revenue, and of amounts collected through a processor on behalf of another party, for books that must support this reconciliation; establish also the point at which such books measure and recognise revenue, whether at the sale or on receipt, and what must support a correction to recorded revenue, as distinct from an adjustment made so that recorded revenue agrees with an externally reported figure. _(partly established; below the required authority class)_
- Establish the substantiation and retention expectation for a reconciliation between a filed information return and the taxpayer's own records, including what the supporting schedule must show. _(partly established)_
- Establish the route by which a recipient seeks correction of an information return that is wrong or that reports activity belonging to another party, and what the recipient must do in the meantime. _(partly established)_
- Establish what the figure reported by a payment processor measures — the gross settlement basis, what it includes and excludes, and the period over which it is compiled — and contrast that with how the books measure revenue. _(established; below the required authority class)_
- Identify the recurring categories of reconciling difference — amounts withheld before deposit, refunded and reversed transactions, amounts collected on behalf of other parties, and non-revenue receipts — and specify which processor-side report exposes each category. _(partly established)_
- Distinguish timing differences created by settlement dating and period cut-off from genuine measurement or scope differences, and show how the answer isolates the timing component. _(established; below the required authority class)_
- Establish how gross revenue and processor fees must sit in the ledger for the reconciliation to be performable, and what has to be reconstructed when only net deposits were ever recorded. _(not established; below the required authority class)_
- Address scope differences between the reported population and the recorded population: more than one processor or channel, more than one entity, and personal or non-business receipts routed through the same account. _(established; below the required authority class)_
- Specify the construction of the reconciliation schedule itself: begin from the reported gross, apply each identified reconciling item with its direction, arrive at the revenue recorded in the ledger, and carry forward whatever remains as an identified residual. _(partly established)_
- Determine what the business does when the reported figure itself appears wrong or covers activity belonging to another party, including the route by which a correction is sought from the issuer. _(established; below the required authority class)_
- Establish what the completed reconciliation and its supporting processor reports must contain, and the basis on which they are retained so the explanation can be reproduced when it is asked for. _(partly established)_
- Distinguish correcting the books where sales are genuinely missing or misclassified from adjusting recorded revenue so that it equals the reported figure, and specify how the answer keeps the reader on the first path. _(not established)_

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_Reference date 2026-09-07. Statements are quoted verbatim from their sources; scope and verification dates are shown on each._