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Understanding your Leap Merchant Services 1099-K Form: https://help.pm.leapevent.tech/a/1760631
All clients who process above a certain threshold via Leap Merchant Services in a given calendar year will receive Form 1099-K from Leap.
This article will help you understand why you might or might not receive Form 1099-K, and what to do with it if you have.
Where can I learn about Form 1099-K and what it contains?
The IRS provides information about Form 1099-K here: https://www.irs.gov/businesses/understanding-your-form-1099-k
Will my organization receive Form 1099-K?
Leap sends out 1099-K forms for all US organizations that have sufficient Leap Merchant Services transactions to cross the IRS filing threshold (detailed at the link above) and/or the organization's state filing threshold for a given calendar year.
If your processing via Leap Merchant Services for the last calendar year was below both thresholds, you will not receive a 1099-K. Remember that per the IRS, "Whether or not you receive a Form 1099-K, you must still report any income on your tax return."
What transactions count toward the amount on my 1099-K?
The amount on Form 1099-K represents payments processed via Leap Merchant Services and available to pay out in the given calendar year. Here are some important specifics about the transactions that count toward the total on the form:
Only Leap Merchant Services transactions
The 1099-K form you may receive from Leap is specifically for Leap Merchant Services, and will therefore only include the credit card transactions processed via LMS.
It will not include any transactions you processed with different payment methods (e.g. cash), or any credit card transactions processed via a different payment processor.
Credit card processing fees are excluded
That means the form reports your net income from credit card transactions, not the gross.
If you processed a $10 donation and that transaction was subject to a 2.7% credit card processing fee, your net would be $9.73 which is the amount that would count toward your 1099-K.
Other fees aren't represented
The form does not take into account other fees you might be charged outside of credit card processing fees (e.g. per-ticket fees based on your contract with us, fees for lost chargebacks, etc).
Refunds are excluded
The form only counts incoming payment transactions. It does not subtract refunds (even refunds back to credit card).
The date range is based on payout availability, per Stripe
Since Leap Merchant Services is built on Stripe, the date range reflects Stripe's reporting practices. Stripe counts all transactions that could potentially have been paid out to clients in a given calendar year. For calendar year 2023, that means all transactions that took place before midnight UTC on December 27th.
The amount on your 1099-K probably does not equal the amount you received in payouts over the calendar year, due to time zone discrepancies, custom payout schedules, and most importantly, refunds.
What report can I run in PatronManager to match my 1099-K?
Because of all the nuances outlined above, there isn't a built-in report to match to your 1099-K. If you need one, though, it's easy to set up! Click below for step by step instructions.
Start with the "Leap Payout Reconciliation w/ Details" report
To find it:
- Head to the Reports tab (use the waffle and search for "Reports" if you don't see it in the header)
- Select "All Reports"
- Search for "Leap"
- Click on the "Leap Payout Reconciliation w/ Details" report
"Save as" immediately
Before you do anything else, save a copy so you don't inadvertently break your payout reconciliation report! Click the dropdown arrow next to "Edit" and click "Save As":
- Give your new report a name, like "LMS 1099-K Report"
- Update the description to something clear, like "Use this to match to our 1099-K from Leap Merchant Services"
- Save!
Click "Edit"
Select the filters tab
Set the Batch Date range to the reporting period
Click on the Batch Date filter, adjust the range so that it starts where your previous 1099-K left off, and ends on the last reporting day for your current 1099-K, and click Apply.
Since Leap Merchant Services started in 2023 and since the last reporting day for the 1099-K in 2023 was December 27th, for calendar year 2023 you should set the start date to 1/1/2023 and the end date to 12/27/2023.
Add a filter for Transaction Total greater than zero
Since the 1099-K doesn't count refunds, we need to ensure we only see net-positive transactions in this report. Click into the "Add filter" field and type "Total" to find the Transaction Total field, then click it:
Choose "Greater Than" as the operator and type a zero into the value field, then click Apply:
Hide details, then save and run the report
Turn off the "Detail Rows" toggle to help the report load more quickly, then click "Save and Run" at the top of the page:
Once you've got your matching total, you can toggle the detail rows back on if you need to.
Scroll to the bottom right to view the "Net Payout" total and compare to your 1099-K
We need the Net Total since that excludes the credit card processing fees. You'll find it at the bottom of the right-most column in the report:
If this total matches, you're done!
Remember that this number is only to match to your 1099-K - because it excludes refunds, it is not an accurate representation of the money your organization received in payouts.
Wait, my numbers don't match!
If this number doesn't match your 1099-K, that probably means you had transactions between the Eastern Time cutoff represented by the Batch Date filter, and Stripe's UTC cutoff used to generate Form 1099-K. That's fine, it just means we need to take the time zone into account and be a little more granular. Continue the steps below!
Determine your time zone's UTC offset in December
You need to know what time it was for your organization at midnight UTC on December 27. There are many time zone conversion tools online that can help, and we've listed a few common offsets for our clients below.
At midnight UTC on December 27th, it was:
- 4pm Pacific
- 5pm Mountain
- 6pm Central
- 7pm Eastern
Click "Edit" on the report
Back on the filters tab, add a new filter for Transaction Date
In the "Add Filters" field, search for "Transaction Date" and click on it
Set the filter as follows:
- Operator: Less than
- Date: 12/27/2023 (the reporting end date for your 1099-K)
- Time: the UTC offset time for your organization (the one you found a couple steps back)
- Apply!
Click "Save & Run"
Check the total at the bottom of the right column against your 1099-K
We'll check the total at the bottom of the "Net Payout" column again - this time it should match, and you're all set!
