Will Cozy report the payments I receive to the IRS? Do I get a 1099-K?
A 1099-K is a special type of form specifically relating to payments processed through an online third-party payment processor (like us). These are to be issued to any entity who qualifies, regardless of if you're an LLC/corporation or any other type of entity.
Essentially, the Form 1099-K is an information (also known as supplemental) return. You should use this in conjunction with your other tax records to determine your correct tax.
When do we report to the IRS?
Individuals or business tax entities that collect over 200 payments and $20,000 in a calendar year are required by the IRS to receive a 1099-K form for tax purposes.
If you meet both criteria in a given year, we'll send you a 1099-K by January 31st of the next calendar year. If you only meet one criteria, we won't file a 1099-K for you.
What information is required?
We'll ask that you specify the tax entities that are associated with the bank accounts on your Cozy account. A tax entity is the legal owner of the receiving bank account.
We'll ask that you enter your name, address, and a Tax ID Number Type such as a Social Security Number.
We'll ask that you enter your name, address, and an Employer Identification Number.
What payments does the 1099-K include?
The1099-K form isn't necessarily an income report, rather something we have to issue as the third party processor for the payments. We are required to report all payments received through Cozy: rental, bills, move-in costs.
How will I know if I'm meeting the criteria?
If your payment volume is on track to surpass the threshold set by the IRS, we'll notify you via email and ask that you add your tax information to your account.
What will happen if I don't comply?
Unfortunately, your payments will be suspended until we receive the requested basic tax entity information for your bank account. Your payments will be re-enabled once the information is entered on your Cozy account!