Stripe 1099-K reconciliation: why the form is gross, and how to tie your books to it

What the form reports

Form 1099-K reports the gross amount of payment transactions a processor handled for you, by month. Gross means before fees, before refunds, before disputes. Stripe files it with the IRS and sends you a copy when your account crosses the federal or your state's reporting threshold. The thresholds have changed several times; check Stripe's tax forms page and your state's rule for the year in question.

Two consequences follow. The form will be larger than your bank deposits for the year, often by five to ten percent. And it will not equal your revenue, because revenue is net of refunds and because the form counts sales tax you collected.

Which month a charge falls in

Stripe places a transaction in the month its funds became available, not the month the card was charged. A charge on December 30 that became available on January 2 is January on the form. If your books recognise it in December, the December and January figures both differ from the form, and the year totals differ by the charges that straddle the year end.

This is why a cash-basis business that books revenue on Stripe's available date reconciles to the form with no timing differences at all. ClearDeposits calls this the Stripe 1099-K basis (available-on date; timing only) and offers it alongside accrual and cash-in-bank. The month-end boundary is worked through in Stripe payout cutoff dates at month end.

The reconciliation

Work from Stripe's data to the form, then from the form to your books.

1. Pull the year's balance transactions with available_on dates in the calendar year (Reports, then Balance, then Balance change from activity; filter to the year by available date).
2. Sum gross charges by month. Include charges only, at gross, including sales tax. This should match the form's monthly boxes. Differences here are usually charges Stripe excluded or included under its own rules, or a refund you netted by mistake.
3. Subtract refunds, disputes, fees and adjustments for the same months. The result is net activity, and it should equal the year's payouts plus the change in your Stripe balance between January 1 and December 31.
4. Tie net activity to the bank. Payouts for the year, adjusted for the ones in transit at each year end, equal the Stripe deposits on your bank statements.
5. Tie to QuickBooks Online. Revenue plus sales tax collected, less refunds and disputes recorded against revenue, should equal step 3 if you are on an available-date basis. On accrual or a bank-date basis, list the year-end straddling charges as the reconciling items.

A worked example

Every line comes from a Stripe report or the bank statement. Nothing is estimated.

Keeping the schedule during the year

The reconciliation is a year of monthly tie-outs done at once. Done monthly, each month is a few numbers and any difference is small and recent. ClearDeposits keeps gross charges, deductions and payouts by available date all year, so the schedule above is a view, not a project, and the monthly entries it drafts for QuickBooks Online are already on the basis the form uses.