Does Gumroad issue form 1099K and 1099-MISC?
This article is neither legal advice nor tax advice. We recommend that you speak to your tax advisor with any questions or concerns around tax reporting.
Will I get a 1099-K?
Do you meet all of the following criteria in the previous calendar year?
- Creator account is based in the United States
- More than $20,000 USD in total gross volume
- More than 200 transactions
If yes, then yes you will receive a 1099-K from our payment processor (Stripe) in your mail.
If you do not meet any of those criteria, sorry, you won't be getting a 1099-K. While this doc may not be very helpful to you, this song will be.
The 1099-K is a purely informational form that summarizes the sales activity of your account and is designed to assist you in reporting your taxes. For more help understanding your 1099-K, go to IRS.gov. You can also download a blank example of the 1099-K form here.
Changes for the 2022 tax year
From 1 January 2022, the threshold for reporting amounts on Form 1099-K will drop to $600 (from $20K and 200 transactions). Note this does not affect 2021 tax reporting that will be available to you from January 2022.
Will I get a 1099-MISC?
Starting 2022, we have also started issuing Form 1099-MISCs for affiliates with commissions greater than $600 USD in the previous financial year.
A user only gets either a 1099-MISC or 1099-K depending on whether they are selling their own products, or are earning commissions as an affiliate, and the revenue amount.
The forms are mailed by our payment processor (Stripe) to the address mentioned in your account settings. In cases like a wrong address, the form is returned to us and we send it to the affiliate's email as a PDF attachment.
Does the 1099 form include PayPal sales, as well?
Yes, 1099 forms include PayPal Connect sales from the previous tax year. All sales you've made on Gumroad will be included.
When can I expect the form to reach me?
We start filing the 1099s in Jan each year (for the last year's earnings) with our payment processor "Stripe". Stripe then submits the form to the IRS electronically and sends out a snail-mail to the receiver of the form (you!).
You can expect the mail to reach you starting Jan-end to March. If you haven't received the form in time and want a digital copy to help you file your taxes, please write to us using the 'Contact Us' form linked below and we can send you a PDF in the meantime.
The 1099 amount don't match my payouts!
Sorry about that, but they are not supposed to. The Form 1099 you've received only serves as a rough approximation for the funds you've received. This is because, as a payment service, we must report our transactional volume attached to you, not the amount paid to you.
To clarify, this means that the dates will reflect all transactions at the time of sale, including the full amount (our fee, and EU/UK VAT, which is not disclosed to you as we pay that ourselves). So, this reporting will not align with your payouts. Nor should it. Here's an IRS link with FAQs on how payment handlers (like Gumroad) need to report the earnings, and it says: "Gross payment card and third party network transaction amounts are reported on the Form 1099-K, Payment Card and Third Party Network Transactions. The "gross amount" of reportable transactions means the total unadjusted dollar amount of aggregate payment transactions for each participating payee."
The payout reports that we send indicate the money that's paid out, not the entire amount you've earned. On the other hand, 1099's are supposed to include ALL the amount earned in the year ( before Gumroad/Stripe fee), which also includes sales that weren't paid out in the same year.
For example, if you sell an eBook for $25 on Dec 31st, you are not going to be paid out that money in the same year (read this doc in case you're wondering why). That's why your payout summary for that year won't include this particular sale, but your 1099 will! Similarly there'll be some sales from the penultimate year that were paid in Jan of last year — and while these will show up in the payouts CSV, they will not in the 1099s.
Please use the 1099s as a marker, not as an end-all-be-all. Your accountant will likely use your deposits (and the associated emails) to help you file your taxes.
PayPal sent me a 1099 for the same amounts reported on my Gumroad 1099! What do I do?
In this case, please talk to your accountant. They should be able to provide a solution to avoid the IRS recording double amounts on your PayPal.
How to report for corrections?
If there's some obvious mistake in the Form 1099 like:
- Payee Name or TIN is incorrect
- Should've been filed as a business but was filed as an individual
- There's a huge difference between the actual and reported earnings
Please report us such discrepancies using the 'Contact Us' form linked below from the email ID registered with your Gumroad account. We will work with our payment processor and file for a correction asap!