Jonah Patel
The 1099-K form is used by third-party payment settlement organizations (TPSOs) or credit card companies and third-party processors to report payments made to payees in a calendar year. The 1099-K form is mandated in Massachusetts and Vermont, with each state having its own set of reporting requirements. In Massachusetts, Form 1099-K must be filed when the gross amount paid in settlement to a payee with a Massachusetts address in a calendar year is $600 or more. Vermont has aligned its 1099-K reporting requirements with the $600 threshold that applies to the 1099-MISC form, which was previously set at $20,000. This change ensures that Vermont residents receive more detailed financial information.
| Characteristics | Values |
|---|---|
| Massachusetts Form 1099-K reporting requirements | Merchant acquiring entities must report gross amounts paid in settlement to payees using Form 1099-K |
| Third-party settlement organizations (TPSOs) | Must report gross amounts paid in settlement to a payee with a Massachusetts address using Form 1099-K if the amount is $600 or greater and is subject to taxation under G.L. c. 62 |
| Filing deadline for 2019 calendar year | 2/28 or 3/31 if filed electronically |
| Filing deadline for Tax Year 2017 | January 31, 2018 |
| Vermont Form 1099-K reporting requirements | Recipients with VT state withholding on forms 1099-B, DIV, G, INT, MISC, NEC, OID PATR, and R. 1099-K recipients with more than $600 in Box 1a |
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What You'll Learn
- Massachusetts mandates Form 1099 filing based on state taxes withheld and total payments
- Third-party settlement organisations must report gross amounts over $600 paid to anyone with a Massachusetts address
- Massachusetts requires the filing of Form 1099-K if the gross amount paid in settlement is $600 or more
- Massachusetts lowered the federal threshold for 1099-K reporting from $20,000 to $600
- Vermont is pursuing a similar provision to Massachusetts regarding Form 1099-K
Massachusetts mandates Form 1099 filing based on state taxes withheld and total payments
The State of Massachusetts mandates Form 1099 filing based on the amount of state taxes withheld and the total payments made. The payer's state identification number refers to the Massachusetts Withholding Tax Account Number. The total amount of taxable income is subject to Massachusetts state income tax. The total amount of state income taxes withheld from the recipient's income is also included.
The State of Massachusetts requires the filing of Form 1099 directly with the state, even if there is no state tax withheld. The state mandates additional forms when filing alongside Form W-2. If you choose to file on paper, include Form M-3 (Reconciliation) with Form W-2. However, electronic filing eliminates the requirement to submit Form M-3. The deadline to file the 1099 Form with Massachusetts is 31 January 2025 in case taxes are withheld. The due date to file Form 1099 without state tax withholding is 31 March.
The state requires the filing of Form 1099-K if the gross amount paid in settlement to a payee with a Massachusetts address in a calendar year is $600 or more, regardless of transactions during the year. This differs from the IRS threshold, which is $20,000 and 200 transactions. Third-party settlement organisations (TPSOs) must report the gross amount paid in settlement to a payee with a Massachusetts address using Form 1099-K. This can be either a Massachusetts Form M-1099-K or IRS Form 1099-K. In general, merchant acquiring entities are banks or other organisations that have a contractual obligation with payees to make payments in settlement for payment card transactions.
Where amounts paid in settlement to a payee in a calendar year meet both the IRS and Massachusetts Form 1099-K thresholds, a TPSO may use the Combined Federal/State Filing Program to file Form 1099-K with the Department. Where amounts paid in settlement in a calendar year to a payee meet the Massachusetts threshold but not the IRS threshold, a TPSO should submit Form 1099-K to the Department directly using MassTaxConnect (MTC).
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Third-party settlement organisations must report gross amounts over $600 paid to anyone with a Massachusetts address
Third-party settlement organisations (TPSOs) are required to report gross amounts over $600 paid to anyone with a Massachusetts address. This applies to all merchant acquiring entities, which include banks or other organisations with a contractual obligation to make payments in settlement for payment card transactions. The reporting must be done using Form 1099-K, which can be either a Massachusetts Form M-1099-K or IRS Form 1099-K. This requirement came into effect beginning with the 2017 calendar year and applies even if the TPSO does not know whether the payment is subject to tax under G.L. c. 62 (the Massachusetts personal income tax).
The Massachusetts Form 1099-K reporting requirements are separate from those imposed by the Internal Revenue Service (IRS). The IRS requires TPSOs to file Form 1099-K only when payments in settlement to a single payee exceed $20,000 and the number of transactions exceeds 200 in a calendar year. However, Massachusetts has lowered its threshold to $600 with no minimum number of transactions to collect taxes from service providers who do not meet the federal requirements. This change took effect in 2019, and companies were required to report retroactively for the entire 2017 tax year.
When amounts paid in settlement in a calendar year meet both the IRS and Massachusetts Form 1099-K thresholds, TPSOs can use the Combined Federal/State Filing Program to file Form 1099-K. If the amounts paid meet only the Massachusetts threshold, TPSOs should submit Form 1099-K directly to the Massachusetts Department of Revenue using MassTaxConnect (MTC). TPSOs filing fewer than 50 Forms 1099-K annually may submit the forms on paper by mailing them to the department.
It is important to note that the Massachusetts 1099-K reporting requirements do not apply to all businesses. They specifically target third-party settlement organisations or TPSOs, which are central organisations with contractual obligations to make payments in settlement to payees participating in a third-party payment network. A third-party payment network is an organisation with which many unrelated providers of goods and services have established accounts and agreed to settle transactions using established mechanisms, often for a fee.
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Massachusetts requires the filing of Form 1099-K if the gross amount paid in settlement is $600 or more
In the state of Massachusetts, Form 1099-K must be filed when the gross amount paid in settlement in a calendar year is $600 or more. This requirement applies to third-party settlement organizations (TPSOs) or merchant acquiring entities, which include banks and other organizations with contractual obligations for payment card transactions.
The Form 1099-K is used to report gross amounts paid in settlement to payees, and it can be either the Massachusetts Form M-1099-K or the IRS Form 1099-K. This requirement differs from that of the Internal Revenue Service (IRS), which mandates Form 1099-K filing when payments exceed $20,000, and the number of transactions surpass 200 in a calendar year.
Massachusetts allows for both electronic and paper filing of Form 1099-K. If a TPSO meets both the IRS and Massachusetts thresholds, they may use the Combined Federal/State Filing Program. However, if they only meet the Massachusetts threshold, they should submit Form 1099-K directly to the Massachusetts Department of Revenue using MassTaxConnect (MTC).
It is important to note that even if there is no state tax withholding, Massachusetts requires the filing of Form 1099-K for gross payments of $600 or more. This mandate ensures compliance with state regulations and aids in determining taxable income when filing tax returns.
Additionally, Massachusetts mandates the filing of Form W-2 and, in some cases, Form M-3 (Reconciliation) when filing on paper. The deadline for Form 1099 filing with Massachusetts is January 31, 2025, if taxes are withheld. If there is no state tax withholding, the due date is March 31.
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Massachusetts lowered the federal threshold for 1099-K reporting from $20,000 to $600
The State of Massachusetts mandates 1099 filing based on the amount of state taxes withheld and the total payments made. The federal threshold for 1099-K reporting is $20,000 in a tax year, with a minimum of 200 transactions. However, Massachusetts lowered the threshold to $600 with no minimum number of transactions. This change was implemented to collect taxes from thousands of service providers who did not meet the previous requirements.
Third-party settlement organizations (TPSOs) are required to report payments on Form 1099-K when the total amount of payments for goods or services exceeds the threshold. In Massachusetts, this threshold is $600, while the federal threshold is $20,000. This means that if a TPSO makes payments in settlement exceeding $600 to a payee with a Massachusetts address in a calendar year, they must file Form 1099-K with the Massachusetts Department of Revenue. The form can be submitted electronically or by paper, and the deadline for filing is January 31st of the following year.
If a TPSO meets both the IRS and Massachusetts Form 1099-K thresholds, they may use the Combined Federal/State Filing Program to file Form 1099-K. If they only meet the Massachusetts threshold, they should submit Form 1099-K directly to the Massachusetts Department of Revenue using MassTaxConnect (MTC). For TPSOs filing fewer than 50 Forms 1099-K annually, they can submit the forms on paper by mailing them to the Massachusetts Department of Revenue.
It is important to note that the Massachusetts Form 1099-K reporting requirements for merchant acquiring entities remain unchanged. Merchant acquiring entities, such as banks or other organizations, have a contractual obligation to make payments in settlement for payment card transactions. In cases where the TPSO lacks information about the applicable tax type or the nature of the payment, they should still report payments meeting the Massachusetts threshold.
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Vermont is pursuing a similar provision to Massachusetts regarding Form 1099-K
The state of Vermont mandates 1099 filing based on the amount of state taxes withheld and the total payments made. The state requires the filing of Form 1099-NEC even if there is no state tax withholding. Vermont also mandates the filing of Form W-2 with the state, even if there was no state tax withholding. The deadline to file Form 1099 with Vermont is January 31, 2025.
Massachusetts also mandates 1099 filing based on the amount of state taxes withheld and the total payments made. The state requires the filing of Form 1099-K if the gross amount paid in settlement to a payee with a Massachusetts address in a calendar year is $600 or more. The deadline to file the 1099 Form with Massachusetts is January 31, 2025, in case taxes are withheld. The state also requires the filing of Form W-2 by the same date.
Massachusetts has lowered the threshold for 1099-K reporting to $600 with no minimum number of transactions. This is in contrast to the federal threshold, which is set at a minimum of 200 transactions and earnings of at least $20,000 in a tax year. Vermont is pursuing a similar provision to Massachusetts, and other states such as California and New York are likely to follow suit.
Vermont's pursuit of a similar provision to Massachusetts regarding Form 1099-K indicates a trend towards closing the tax gap in the sharing economy. This move by Vermont suggests a recognition of the need to adapt tax requirements to the evolving nature of the economy, particularly with the rise of sharing-economy organizations. By lowering the threshold for 1099-K reporting, Vermont can collect taxes from a larger number of service providers who may not meet the federal requirements. This adjustment brings the state's tax laws more in line with the realities of the modern economy, where a significant portion of economic activity occurs through digital platforms and non-traditional employment arrangements.
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Frequently asked questions
The 1099-K form is used to report gross amounts over $600 paid to anyone with a Massachusetts address.
Third-party settlement organizations (TPSOs) must file the 1099-K form. A TPSO is a central organization with a contractual obligation to make payments in settlement to payees participating in a third-party payment network.
The deadline for filing the 1099-K form in Massachusetts is January 31.
