My 1099K form doesn't match my Payment Method report

[duongkitchen68]

I know 1099 amounts include gross amounts from "card" transactions, but I still see huge discrepancies. The support person I talked with is pretty much useless. He keeps saying "Please refer to a tax professional", while this is an issue from Square.

I didn't compare the 1099 amounts to the "Sale Summary"; instead, I went to the "Payment Method" report, and the "Payment Amount" column shows 920k on the card payment row. Payment Method report shows the amounts customers pay by payment thods, and we have only card and cash payments. This amount is a gross payment total, before refunds. I expect the amounts on 1099k to be close to this number, but it turned out to be 960k. I also now the amounts on the 1099k form is reported based on UTC timzone, still that for sure doesn't explain a 40k difference.

I think Square is being shady and trying to overreport the money they process.

[ryanwanner]

Hello @duongkitchen68 !

While I do agree with the tax professional comment, I think there are some things we can look at before going down that road...

On your Payment Report screen, you're wanting to look at the Payment Amount column. This will show actual payments before refunds. Refunds are not counted as a deduction of the amount that was collected. I don't know the actual answer to why but I'm assuming it has to do with how the sale itself is reported to the IRS. The IRS isn't really going to care if we gave money back.

Also remember that Gift Cards are shown on this column. You'll need to subtract those sales from the bottom line.

After that, I bet there are some bankers hours that can throw numbers off. For example, my February number on the 1099 is over by $60.25, but my March number is short by the same amount. If I were to dig into things a little more, I bet I'd find that I had a $60.25 online sale very late in the day on the 28th. Because of that, the number showed up on the March report.

Hopefully this helps narrow down the discrepancies you're seeing! Square has been around for 16 years now and has millions of sellers on its network. If they were going to try to skim and/or overreport, it's a guarantee it would have been found before now. It's just all about how those numbers are shown. 

[duongkitchen68]

Yes I know about "Payment Amount column", "Refunds are not counted", etc., and I said so in my post. We don't have gift cards. Still, 40k discrepancy.

[ryanwanner]

Well then I recommend breaking down your reporting by the month.

When I researched my numbers for my initial reply, I pulled up my 1099. I then looked at each month to verify that the numbers matched. Except for the month I mentioned, everything looks right. If you have multiple locations, be sure to narrow the report to the location of each 1099 as well.

After that, I don't know what to tell you. Could there be a discrepancy? Sure. Software isn't infallible. Thinking that it's Square deliberately trying to scam you may be a stretch though.