The IRS has delayed their requirement for third party settlement organizations such as Upwork to report transactions of at least $600. You will still receive a Form 1099-K if you are a U.S. Person and receive at least $20,000 in payments from your clients on Upwork in 2022 that included 200 or more transactions. If you reach this amount, you will receive a Form 1099-K from Upwork in 2023 for your 2022 transactions.
We know taxes can be difficult, especially figuring out which forms you need. While we can’t provide you with legal or tax advice, we can clarify which documents you will receive from us.
If you're a freelancer whom the Internal Revenue Service (IRS) defines as a “U.S. Person” and you earn money working through Upwork, you need to report this income on your tax return even if you do not get any forms from us. However, we will send you a 1099-K if you earn $20,000 or more in payments from your clients on Upwork in the calendar year and have at least 200 transactions.
This article applies specifically to U.S. persons. If you are not a U.S. person, you will need to complete and submit Form W-8BEN or Form W-8BEN-E to Upwork, and you are also responsible for complying with the tax laws in your own jurisdiction. For questions about what taxes you owe, you may wish to consult with a trusted tax expert or advisor — Upwork cannot provide tax advice.
Form 1099-MISC and Form 1099-NEC
Starting in tax year 2020, non-employee compensation should be reported on Form 1099-NEC instead of Form 1099-MISC. Freelancers — including those who earned $20,000 or more — will not receive a Form 1099-NEC or 1099-MISC from Upwork. Your clients are not required to send you a 1099-NEC or 1099-MISC, either.
The 1099-K form is used to report payments made to U.S. taxpayers to the IRS. If we are required to send a Form 1099-K to the IRS for you, you will also receive a copy, which may help you document your yearly income as you prepare your taxes or complete other business.
Qualifying freelancers and payments
Freelancers and businesses who are U.S. taxpayers and receive at least $20,000 in gross payments during the calendar year with 200 transactions or more will receive a Form 1099-K. Under the Internal Revenue Code Section 6050W, Upwork will file a Form 1099-K with the IRS for you, and you will receive a copy of your Form 1099-K via U.S. Postal Service postmarked by January 31.
Only those who have received at least $20,000 in gross payments and had at least 200 transactions on Upwork will receive a Form 1099-K. Transactions only include payments. Fees, taxes, withdrawals and refunds do not count as eligible transactions. If you do not meet the minimum payment threshold, you will not receive any type of Form 1099 from us, although you are still required to report your income.
This minimum $20,000 is a total of all your payments on Upwork, not per contract. For example, If you work on 200 contracts and get paid $100 for each, you will qualify to receive a Form 1099-K.
A 1099-K is a record of all payments made to you within the calendar year, not only what you withdraw. In accounting terms, this is a “gross” total rather than “net.” It includes all payments to the freelancer on all contracts. This includes fees you paid to Upwork and refunds you paid to your clients out of your Upwork payments. For example:
- Your client paid you $25,000, but you refunded $500, $6,000, or even all $25,000. We still have to use the $25,000 total before fees and refunds for reporting to the IRS.
- Your client paid you $100 for a contract and you paid 10% ($10) in fees to Upwork. The full $100 counts toward the 1099-K total, not the $90 in earnings that could withdraw. That means if you have $100 contracts with 250 different clients, you’ll have $25,000 in payments on your Form 1099-K.
The membership and service fees you pay to Upwork may be tax-deductible business expenses and refunds may not be considered “earnings” for tax purposes. Because the Form 1099-K is a record of payments only, what you report as income/earnings to the IRS may differ from the amount on this form.
- For total payments received, use the Transaction History report filtered by credits
- For total billings (including fees, but subtracting refunds), use the Billings and Earnings report
Employees paid through Upwork Payroll
If you and your client agreed that you are an employee, you must be hired through Upwork Payroll. When you use the Upwork Payroll service, our staffing provider will be the employer, handle all of the withholding and payment of taxes, and provide a Form W-2.
Frequently Asked Questions
The IRS is still requiring us to collect this information from our freelancers and validate the numbers, even when we are not sending you a Form 1099-K.
For now, nothing has changed. The IRS delayed the requirement for third party settlement organizations such as Upwork to send Forms 1099-K to freelancers who make at least $600. You will continue to receive a Form 1099-K for gross payments that totaled at least $20,000 and that included 200 transactions or more.
Any U.S. taxpayer who received combined payments of at least $20,000 through the Upwork platform that included at least 200 transactions will receive a Form 1099-K from Upwork.
Ensuring we have the correct tax residence address and tax ID on file allows us to correctly file your 1099 forms as required by the IRS, as well as send it to your correct address this upcoming tax filing season.
Plus, we are required to withhold taxes and submit them to the IRS at a pre-set tax rate if you do not provide us with a valid Tax Identification Number (SSN, EIN, or ITIN) on your W-9.
We will mail your 1099-K form by January 31st each year for the previous year’s payments. For example, you will receive your 2022 1099-K in January or February of 2023.
We will mail the 1099-K form to all applicable freelancers. Please ensure that your address is current and that it is a valid street address, not a P.O. Box. To update your address, go to Settings › Tax Information.
We plan to have this feature available on our platform soon for users who opt-in to digital receipt. However, for the 2022 tax filing season, we will mail all 1099-K forms.
All income that you make on Upwork may be taxable and should be reported. Please consult with your tax advisor about what earnings and expenses you should claim on your taxes.
The U.S. Internal Revenue Service requires Upwork to report all gross payments to freelancers on Form 1099-K. We cannot deduct the fees that you pay from what we report. Please consult your tax advisor about what earnings and expenses you should claim on your taxes.
The U.S. Internal Revenue Service requires Upwork to report all gross payments to freelancers on Form 1099-K. We cannot deduct refunds that you pay to clients from the total that we report. Please consult your tax advisor about what earnings and expenses you should claim on your taxes.
You will receive a Form 1099-K if you are a U.S. person and receive at least $20,000 in payments from your clients on Upwork in 2022 that included 200 or more transactions.
Eligible transactions only include payments. Fees, taxes, withdrawals, and refunds do not count as eligible transactions. The following are considered transactions:
- Hourly invoices
- Fixed-price invoices
- Expense reimbursements
To check the number of eligible transactions in a year:
- Go to Reports > Transaction History
- Set your Statement Period as January 1 - December 31 of the relevant year and select Go
- Choose Download CSV
- You can sort by the Type column in the sheet to view the number of eligible transactions