Reports: US Dispensaries: Reporting Your Income With Form 1099-K

This article is intended for customers who received Form 1099-K from Fullscript. We suggest referring to US Businesses: Reporting Your Income for Tax Purposes if you did not qualify for this form during the tax year.

 

In this article:

Form 1099-K Eligibility
Receiving Your 1099-K from Fullscript
Important Figures in Your Financial Reports
1099-K Export Report
Sales Tax
Frequently Asked Questions

 

Note: Our Customer Success team is available to answer any questions surrounding available reports, but we are unable to provide extensive tax advice. Questions relating to how your taxes should be filed should be directed to your tax professional.

 

Form 1099-K Eligibility

We are required to issue a 1099-K form to you if you meet both of the eligibility criteria below:

• You had $20,000 USD in sales during the calendar year AND
• You received 200 or more payments during the calendar year

 

State Exceptions to 1099-K Eligibility (MA & VT)

If you are located in Massachusetts or Vermont, you will receive a 1099-K form if you have $600 or more in sales OR if you meet the criteria above.

Your sales information will also be reported to the IRS, as well as the state tax authorities for Massachusetts and Vermont. You will still only receive one 1099-K from Fullscript if you satisfy both state and IRS requirements.

 

Tip! Didn't meet 1099-K eligibility requirements this year? See US Businesses: Reporting Your Income for reporting income without this form. 

 

Receiving Your 1099-K from Fullscript

Should you be eligible to receive a 1099-K, we will issue the form based on the tax information provided in your Dispensary Settings. We then mail a physical copy to the address listed here. Keep this information up to date to avoid potential delays receiving your 1099-K. 

The Tax tab within an account holder's Dispensary Settings.

 

Note: At the end of the tax year, we may reach out to some account holders to request missing information or confirm the information we have on file is correct. 

 

Important Figures in Your Financial Reports 

Gross Amount Transacted (1099-K Amount)

This is your sales total with expenses included. Fullscript is required to report the gross amount transacted through your account to the IRS once you’ve met the eligibility thresholds. We are required to report your gross amount transacted on form 1099-K.

The IRS states that the gross amount transacted is “the total unadjusted dollar amount of aggregate payment transactions for each participating payee. This amount is not to be adjusted to account for any fees, refunds, or any other amounts.”

 

Sales Total

As mentioned above, Sales Total represents the total retail value of orders transacted excluding expenses. This amount is found in the Account Activity and Balance Report.

 

Warning! The Sales Total, from the Account Activity and Balance Report, will differ from the gross amount transacted (box 1a) on your 1099-K as the gross amount transacted must include expenses. 

 

Net Income

Net income is your Sales Total less Cost of Sales (Cost of Goods). This figure is calculated in your 1099-K Export and Account Activity and Balance Report.

 

Expenses

These are the fees charged by Fullscript. Fees include (not a complete list):

• Fullscript processing fees
• Costs of goods
• Shipping charges
• Sales Taxes
• Refunded charges
• All adjustments (if any)

The IRS states that separate reporting of these transactions is not required. However, form 1099-K can be used in conjunction with your other Fullscript reports and tax records to determine your correct tax.

 

Tip! You can use the fees charged by Fullscript as your cost of sales and report them as a business expense on the appropriate line item of Schedules C, E and F.

 

1099-K Export Report

Those eligible to receive Form 1099-K should refer to the 1099-K Export available in your account on the Reports page. This report lists each sale by order number and applicable amounts, including the dollar amount the order has contributed to your 1099-K amount. It is not Form 1099-K, but does state your gross amount transacted. We recommend you provide this report to your tax professional along with your 1099-K. 

To download this report from your account:

1. Log in to your account and go to Reports
2. Scroll down to the 1099-K Export header
3. Select the tax year to export the report

Downloading the 1099-K Export from the Reports page.

 

Note: This export will not be available until the January following the current tax year, once 1099-Ks have been issued.

 

1099-K Reconciliation 

Beneath the transaction in your 1099-K Export is a reconciliation of your 1099-K amount to your net income. Useful definitions for the figures in this reconciliations have been provided below. 

An example reconciliation of your 1099-K amount found at the bottom of the 1099-K Export report. 

 

Useful Definitions

Term	Definition	Reconciliation Identifier (above)
1099-K Amount	Order total amount charged to the buyer and included on the 1099-K form issued by Fullscript.	A
Fullscript Fees	These are the fees charged by Fullscript and should be used as expenses when calculating Net income.	B
Gross Income	1099-K amount minus the Fullscript Fees.	C
Refunded Payments	Amounts refunded.	D
FS Fees Refunded	Fullscript fees refunded in association with refunded payments.	E
Refunded Income	Refunded payments minus Fullscript fees refunded.	F
Net Income	Gross Income minus refunded income.	G

 

Account Activity and Balance Report 

The 1099-K Export lists each sale by order number, stating the gross amount of the transaction, less Fullscript fees charged and refunds issued, and the resulting net income. This export can be used in conjunction with the Account Activity and Balance Report to determine your proper earnings for tax purposes.

To download the Account Activity and Balance Report:

1. Log in to your account and go to Reports
2. Scroll down to the Account Activity and Balance Report header
3. Select a tax year then select Excel to download a formatted version

 

Downloading the Account Activity and Balance Report from Reports.

 

Note: Your net income calculated in your 1099-K reconciliation at the bottom of your 1099-K Export should match the net income calculated in the Excel download of the Account Activity and Balance Report.

 

Sales Tax

Fullscript collects and remits applicable sales tax to the state for you, so you have one less thing to worry about.

 

Note: Fullscript does not collect or remit sales tax in home rule jurisdictions with self-administered local taxing authorities (cities, counties, or special tax jurisdictions) that have chosen to collect and administer sales or use tax independently from the state.  

 

Frequently Asked Questions

In this section:

Why did I receive a 1099-K?
Why is my Fullscript 1099-K reporting a number higher than what I actually earned?
Why am I receiving a 1099-K and not a 1099-Misc?
What do I need to share with my tax professional to complete my taxes?

 

Why did I receive a 1099-K?

If your gross amount transacted was greater than $20,000 and 200 transactions, Fullscript is required to mail you a 1099-K. One exception exists for our practitioner’s located in Massachusetts and Vermont, who will receive a 1099-K if total sales exceeds $600 USD.

Dispensary owners can reach out to our Customer Success team to request a PDF copy of their 1099-K, but keep in mind that 1099-Ks for the current tax year are not issued until January of the following year. 

 

Why is my Fullscript 1099-K reporting a number higher than what I actually earned?

Don’t worry, this is normal, and required. As per IRS 1099-K instructions, we are required to report the gross amount transacted of payments that we facilitated on your account as opposed to your net earnings.

Gross Amount Transacted consists of:

• Fullscript processing fees*
• Cost of goods
• Shipping charges
• Sales Taxes
• Refunded charges
• All adjustments (if any)

*All sales tax and shipping charges are included in the fees charged to you by Fullscript. You will not have to pay taxes on Fullscript’s fees.

 

Why am I receiving a 1099-K and not a 1099-Misc?

Fullscript is legally a Third-Party Settlement Organization, meaning we facilitate your patient’s orders by administering the transaction and organizing the delivery of products at the price you selected.

Form 1099-K is typically reserved for electronic payments and payments by credit card to contractors. If a company is deemed a payment settlement entity (PSE), it is required to file a 1099-K form.

The TPSO is:

• The establishment of accounts by a significant number of unrelated parties.
• An agreement between the organization and the sellers to settle payment transactions.
• The establishment of standards and mechanisms for settling the transactions.
• The organization's guarantee that the provider will be paid.

 

What do I need to share with my tax professional to complete my taxes? 

✔ Form 1099-K issued by Fullscript (if eligible)

✔ 1099-K Export Report

✔ Account Activity & Balance Report (for tax year)

 

Note: Don't forget to verify your tax information before your 1099-K is issued. Contact our Customer Success team if you have any questions.