I received a Form 1099-K from PetPocketbook. What does this mean?

What is a Form 1099-K?

Time to nerd out together šŸ¤“

The Internal Revenue Service (IRS) requires all platforms that process payments in the U.S. to provide information about customers who receive payments for the sale of goods or services. This is filed in the form of a 1099-K, which helps the IRS ensure that businesses are accurately filing their annual tax returns. We work with Stripe, our payment processing partner, to prepare Form 1099-Ks for qualifying businesses that accept payments through our platform. For qualifying businesses, we file the form with the IRS and appropriate state tax agencies, and if we do, we will mail you a duplicate copy for reference as well around January 31st of each year.

So how do you know if you "qualify" to receive a 1099-K? PetPocketbook will issue a Form 1099-K to businesses based in the United States that have passed federal and/or state reporting thresholds for payments received through our platform.

The federal reporting threshold for 2023 is:

  • gross payments in the calendar year exceeding $20,000 for goods and services AND 
  • more than 200 such transactions in the same calendar year. 

While most states adhere to federal reporting guidelines, the following states have lower threshold requirements:

  • Arkansas: at least $2,500 in gross payments, regardless of the number of transactions
  • District of Columbia: at least $600 in gross payments, regardless of the number of transactions
  • Illinois: at least $1,000 in gross payments AND 4 transactions
  • Maryland: at least $600 in gross payments, regardless of the number of transactions
  • Massachusetts: at least $600 in gross payments, regardless of the number of transactions
  • Montana: at least $600 in gross payments, regardless of the number of transactions
  • New Jersey: at least $1,000 in gross payments, regardless of the number of transactions
  • North Carolina: at least $600 in gross payments, regardless of the number of transactions
  • Vermont: at least $600 in gross payments, regardless of the number of transactions
  • Virginia: at least $600 in gross payments, regardless of the number of transactions

How do you define "gross payments?"

If you have received a Form 1099-K from PetPocketbook, that means that you received gross payments in excess of the dollar amount and/or transaction count requirements at the federal and/or state level. So how is "gross payments" defined to determine whether you meet the reporting threshold?

Gross payments as reported by PetPocketbook is the total of all charges (credit/debit card or ACH bank transfers) processed on your behalf through our platform via Stripe in the calendar year, including:

  • any tip that pet parents may have included on transactions charged by PetPocketbook
  • if applicable, sales tax paid with payments made online through PetPocketbook
  • any refunded payments originally charged on PetPocketbook in the calendar year 

It does not include:

  • any off-platform payments you may have received outside of PetPocketbook (such as Venmo, PayPal, Zelle, cash, and check), even if you've manually inputted these payments into your PetPocketbook account. Since we did not transfer those funds into your bank account, we are not a reliable source to validate that income and therefore not obligated to report those transactions.
  • service fees that pet parents pay when checking out on PetPocketbook. Since the service fee is paid to PetPocketbook, this income does not count against you and is not included in the definition of "gross payments" for your business.

How do I use the Form 1099-K that I receive?

We are not tax experts and cannot provide tax advice, so we recommend that you consult a professional tax advisor on how you should use the information received in your 1099-K. 

That said, this form is a duplicate of what we are filing with the IRS and your state tax agency (where applicable) and is being provided to you as a reference. If you believe any information on the form is incorrect, particularly your tax ID, legal entity name, and mailing address, please reach out and let us know so that we can update that information and file a correction, if necessary!

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