If you take app payments, there are important changes the 1099-K

Many providers have begun using electronic payment apps to accept payments from families. Providers have always been required to report all income received but now you may be reminded of that obligation when you receive a Form 1099-K in the mail. The Form 1099-K is not new – it was created by the IRS ten years ago to report revenue from payment cards and third-party network transactions. The payment threshold to receive a 1099-K has recently been changed likely to account for the increased usage of electronic app payments as a main form of payment for many businesses. All electronic payment app vendors, like Square and Cash App, will now send a 1099-K to any business that received more than $600 in payments for the year.

This is important to you if you use one of these services to collect payments from your families as you will need this information to prepare for your taxes. Family care providers in Massachusetts, Mississippi, Maryland, Vermont, and Virginia experienced this change in the 2021 tax year and this year all providers will be affected.

Using these apps can be quick and simple but you should create separate accounts to track your personal funds and your childcare business funds. This will support you in determining adequate recording of your business revenue. If you are not using a business account, but are still receiving payments for your business, you will not receive a 1099-K however you must still report that income.

You can find more information about this and how it may affect your child care business at
https://www.tomcopelandblog.com/blog/whats-new-for-family-child-care-providers-who-use-electronic-payment-apps?rq=1099-k

Note: If you are a child care provider in Texas, Virginia, Wisconsin, or Indiana, you may be eligible for free business coaching from Civitas Strategies Early Start.

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