Does Square Report to the IRS? Square 1099-K Rules for 2026

Yes. Square reports your card sales to the IRS on Form 1099-K once your 2026 card payments pass more than $20,000 and more than 200 transactions, the federal threshold the One Big Beautiful Bill Act restored for payment platforms. Square issues the form at far lower amounts to sellers tied to seven jurisdictions and reports it to those states: $600 in Massachusetts, Maryland, Virginia, Vermont, and Washington, D.C., $1,200 in Missouri, and over $1,000 with four or more payments in Illinois, according to Square's help center. The form shows gross card payments before fees and refunds, and the income is taxable whether or not a form arrives.

Key takeaways:

• Federal trigger Square applies: more than $20,000 AND more than 200 transactions in a calendar year, counting every Square account under the same taxpayer ID
• Lower state triggers on Square's list: $600 (MA, MD, VA, VT, DC), $1,200 (MO), over $1,000 and 4+ payments (IL)
• Box 1a is gross: card tips, sales tax collected on card sales, and payments you later refunded are inside it; fees are not taken out; cash sales are not included
• Your 2026 form appears in the Square Dashboard under Account & Settings > Tax forms by February 1, 2027 (January 31 is a Sunday)
• Report gross receipts on Schedule C line 1, refunds on line 2, and Square fees as an expense

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When Does Square Send a 1099-K?

Square sends a 1099-K for 2026 when either of two tests is met: the federal test (more than $20,000 in gross card payments and more than 200 transactions in the calendar year) or the state test for the state tied to your Square taxpayer information. Square adds up every account that uses the same taxpayer identification number (TIN), so two locations or two Square accounts under one EIN or SSN count as one seller. Square also says it "may report, solely within its discretion, on amounts below these thresholds."

The §6041(a) line that Maryland, Virginia, and Vermont borrow is the Form 1099-NEC and 1099-MISC threshold, which the One Big Beautiful Bill Act raised from $600 to $2,000 for payments made after December 31, 2025. Vermont already says $2,000. Maryland and Virginia had not published a new figure when we checked on October 6, 2026, and Square's list still shows $600 for all three, so a seller in those states with $600 to $2,000 of card sales should expect a Square 1099-K for 2026 anyway. The Form 1099-K guide for 2026 covers how the federal threshold went from a planned $600 back to $20,000.

A state-only 1099-K is issued to you and reported to the state. Square's help center does not say it also sends those below-threshold forms to the IRS, and the tax answer is the same either way: the income belongs on your return.

Why the IRS says card processors report every dollar

The IRS's 1099-K page says that customers paying you directly by card produce a 1099-K from your card processor "no matter how many payments you got or how much they were for." Under IRC §6050W, payment card transactions settled by a merchant acquiring bank have no minimum, while the $20,000-and-200 exception in §6050W(e) applies to third party settlement organizations. Square's help center applies the $20,000-and-200 test to its sellers in most states, so a Square 1099-K below those numbers in an unlisted state reflects Square's discretion rather than a rule you crossed.

Check Whether Square Will Send You One

What Square Reports in Box 1a: Gross, Not Net

Box 1a of a Square 1099-K is the gross dollar amount of your reportable card payments for the year, before any deduction. Square lists what goes in: credit and debit card payments, gift card payments, Cash App Pay transactions, taxes and tips collected on card transactions, and payments you later refunded. Box 1a is not reduced for processing fees, refunds or chargebacks, credits or discounts, or shipping, and cash payments never appear on the form. The gross vs net income guide explains why the IRS starts from the larger number.

Other boxes break the same total down. Box 1b shows card-not-present payments (online, keyed, phone), boxes 5a through 5l split box 1a by month, and box 4 shows any backup withholding. Square dates each transaction in Coordinated Universal Time (UTC), so a late-evening sale on December 31 in the continental U.S. can count toward the next year.

The 2026 Form 1099-K adds two boxes, per the IRS instructions revised for December 2026: box 1c for the cash tips included in box 1a and box 1d for the Treasury Tipped Occupation Code. They implement section 70201 of the One Big Beautiful Bill Act, the provision behind the new deduction for qualified tips. If customers tip through Square, those boxes are where the tip total and occupation code will appear on forms issued in early 2027.

In conversations with card-terminal sellers while building Jupid, most Square tax worries come down to one gap: the 1099-K is bigger than the money that reached the bank.

Worked Example: Matching a Square 1099-K to Schedule C

Bettina runs a mobile dog-grooming van in Massachusetts as a sole proprietor and sells no taxable goods. In 2026 her customers paid $18,400 by card through Square in 412 transactions, including $1,650 of card tips and $300 she later refunded to two customers. She also took $2,100 in cash and checks. Every card payment was tap, dip, or swipe on Square Free.

She stays under the federal line, because $18,400 is not more than $20,000, but the Massachusetts $600 rule applies: Square issues her a 1099-K, reports it to the Massachusetts Department of Revenue, and posts it in her Dashboard.

Her 1099-K is $840.20 more than her Square deposits, and her gross receipts are $2,100 more than the 1099-K. Both gaps are normal. Working backward from bank deposits would understate line 1 by the refunds and fees, which belong on lines 2 and 10, and would miss the cash entirely. The tips stay in her income because she works alone; a groomer with employees would pay card tips out to staff as their wages, which offsets them on the expense side.

Where to Find Your Square 1099-K

Sign in to the Square Dashboard and open Account & Settings > Tax forms. Square posts each year's form by January 31, or the next business day when January 31 falls on a weekend, which makes February 1, 2027 the date for 2026 forms. If no form appears, you most likely did not qualify; your yearly sales summary and card processing fees are still available in the Dashboard.

To check box 1a yourself, set the Dashboard's reporting hours to UTC (Reports > Settings > Reporting timeframes, Europe/London UTC+00:00), then run Reports > Payments > Payment methods for the full calendar year with cash excluded. The payment amount should match box 1a.

Square corrects forms for up to the past three tax years through the same page ("Request a Form 1099-K correction"), and every request needs an official bank statement showing Square transfers in that year. A 1099-K from Block, Inc. for an account you never opened points to identity theft; Square sends those cases to its support team and IdentityTheft.gov.

Does Square Report Sales Tax to the State?

No. Square calculates sales tax at checkout if you set up tax rules, but its help center says it is "solely your responsibility" to configure, charge, collect, and remit applicable taxes. You file and pay sales tax with each state yourself. What Square reports to the seven states on its list is 1099-K information, which includes any sales tax you collected on card sales because box 1a is gross.

On Schedule C, collected sales tax follows your state's legal design. If the state imposes the tax on the buyer and you only collect it and pay it over, it stays out of gross receipts and is not deductible. If the state imposes it on you as the seller, include it in line 1 and deduct it on line 23, per the Schedule C instructions. Either way, the sales tax inside box 1a is not profit.

Are Square Fees Tax Deductible?

Yes. Square processing fees are an ordinary business expense on Schedule C, and line 10 (commissions and fees) is the usual home for them. Square does not subtract them in box 1a, so you deduct them as an expense instead of shrinking the 1099-K figure. On Square Free the in-person rate is 2.6% + 15¢ and online or invoice card payments cost 3.3% + 30¢; the Square fee calculator totals a year by payment type and plan. The Schedule C instructions guide walks through the other expense lines.

Square TIN Mismatches, B Notices, and 24% Backup Withholding

Square attaches your 1099-K to the taxpayer information in your Dashboard. An account that never had business tax details entered defaults to the owner's legal name and Social Security number, which is the wrong taxpayer for an LLC or corporation reporting under its own EIN. When the name and TIN don't match IRS records, Square is required to send a B Notice asking you to correct them, and a payee who doesn't furnish a correct TIN can have backup withholding taken from payouts at the IRS's current 24% rate. Update the details under Account & Settings > Tax forms before December 31 so the 2026 form names the right taxpayer.

Other Square Tax Forms: Payroll, Interest, and Cash App

• Square Payroll generates and files Form W-2 for your employees and Form 1099-NEC for the contractors you pay through it. Those forms report what you paid others, not what customers paid you, and they sit under Staff > Payroll > Tax forms.
• Form 1099-INT comes from Square when your Square Savings account earned $10 or more of interest during the year, also available by January 31.
• Cash App for Business, also part of Block, issues its own 1099-K to business accounts with more than $20,000 and more than 200 payments in a year. Cash App Pay payments taken through your Square checkout, by contrast, land on your Square 1099-K. The payment-app guide to Venmo, PayPal, and Cash App compares the rest.

What a Square 1099-K Does NOT Mean

• It is not a tax bill. It reports gross payments; your tax depends on profit after expenses on Schedule C and self-employment tax on that profit.
• No form does not mean no tax. The IRS's 1099-K page says income must be reported whether or not a form arrives.
• It does not cover cash. Cash and check sales are taxable even though Square never reports them.
• It is not a sales tax return. Square does not remit sales tax for you.
• It does not report your payroll. Wages and contractor payments go on W-2s and 1099-NECs.
• It is not per location. Square combines every account under one TIN into one form.

Common Square 1099-K Mistakes

1. Reporting bank deposits as income. Deposits are net of refunds and fees, and Schedule C line 1 starts from gross. Bettina's deposits were $840.20 below her box 1a.
2. Subtracting fees twice. Deduct Square fees once as an expense; don't also lower line 1 by them.
3. Dropping cash sales because they aren't on the form. The 1099-K is the floor for card income, not your total income.
4. Leaving the account on the owner's SSN. An LLC with an EIN that never updated its Square taxpayer information gets a 1099-K in the owner's personal name.
5. Reconciling in local time. Sales near midnight on December 31 can shift years, because Square dates transactions in UTC.
6. Forgetting a second account. Two Square accounts under one TIN are added together for the threshold and the form.
7. Assuming the $600 states disappeared with OBBBA. Massachusetts still uses $600, and Square still issues forms at $600 in Maryland, Virginia, Vermont, and DC.

Square Sales to a Clean Schedule C: How Jupid Helps

Square deposits arrive net, the 1099-K arrives gross, and the gap is refunds, fees, and timing. Jupid connects to your business bank account and categorizes transactions automatically at 95.9% accuracy, so Square payouts, refunds, processing fees, and cash deposits sit in separate categories all year. Ask the AI accountant in WhatsApp or iMessage "how much did Square take in fees this year?" and get a real-time answer from your own transactions. Jupid does not file your 1099-K or your sales tax returns; it gives you the numbers to match box 1a to Schedule C. Try Jupid.

Sources

• Square: Manage your Form 1099-K
• Square: Update your Taxpayer Identification Number
• Square: Download Form 1099-INT
• Square Payroll: Verify and distribute Form 1099-NEC
• Square: Understanding our fees
• Cash App: Form 1099-K tax reporting FAQs
• IRS: Understanding your Form 1099-K
• IRS: Instructions for Form 1099-K (Rev. December 2026)
• IRS: Instructions for Schedule C (Form 1040), 2025
• IRS: Backup withholding
• IRC §6050W: Returns relating to payment card and third party network transactions
• IRC §6041: Information at source (the Form 1099-MISC threshold)
• Massachusetts DOR: Form 1099 filing requirements
• Illinois Department of Revenue: Electronic W-2 and 1099 programs
• Vermont Department of Taxes: 1099-K notices
• Virginia Tax Bulletin 20-10: Form 1099-K filing requirements
• Maryland Tax-General §10-825
• Missouri DOR: 1099 instructions and specifications handbook

Reviewed October 6, 2026 against Square's help center, the IRS Form 1099-K instructions (Rev. December 2026), and the state sources above. Square's state list and state thresholds can change before forms are issued in early 2027. This article is general education, not personalized tax, legal, or accounting advice; consult a qualified tax professional for your situation.