Building a Square 1099-K Workpaper: What to Pull and How to Read It

Square clients are common in retail and food service, and their 1099-K reconciliation has its own quirks compared to Stripe or PayPal — mostly because Square's export uses different column names and bundles more into "gross" than preparers expect. Here's what the workpaper actually needs.

Pull the right report

Square's Transactions CSV (Dashboard → Sales → Transactions → Export) is the one you want. It includes, among many other columns: Gross Sales, Discounts, Net Sales, Tax, Tip, Partial Refunds, Fees, and Net Total. A Deposits or payout-level report will not give you per-transaction detail and won't reconcile the same way — if a client hands you a deposits summary, ask for the Transactions export instead.

What's actually inside "Gross Sales"

Square's Gross Sales figure is the pre-discount, pre-refund sale amount — it does not include tax or tips as separate line items, but it also doesn't yet reflect any refunds issued, which show up in their own Partial Refunds column rather than as a negative adjustment to Gross Sales on the same line. This is the detail that trips up preparers coming from Stripe, where a refund is usually its own negative-gross transaction: with Square, you need both columns to get the real picture.

Tax is not revenue, and Square already separates it

Unlike some processors where sales tax gets buried in the gross figure, Square's export gives tax its own column. That makes one part of the reconciliation easier: tax collected on behalf of a state is pass-through and belongs in neither gross receipts nor expenses. Exclude it explicitly rather than leaving it folded into an unexplained variance.

Fees follow the same rule as everywhere else

Square's Fees column is the processing fee taken per transaction. As with any processor, this is a deductible business expense — commissions and fees on Schedule C — not a reduction to gross receipts. Line 1 still equals Box 1a; the fee total goes on its own line, full stop.

Building the three-way comparison

The same structure applies as with any processor:

1. Box 1a from the 1099-K
2. Square's own gross — sum of Gross Sales from the Transactions export for the period
3. The books' recorded revenue for the same period

Gap 1 (Box 1a vs. Square gross) is usually clean if you pulled the correct report and the date range matches the 1099-K's calendar year exactly — a common miss is exporting by fiscal year or a custom date range that doesn't line up with the calendar year the form covers. Gap 2 (Square vs. books) is a bookkeeping question: unrecorded deposits, tips posted to the wrong account, or discounts handled inconsistently between Square and the general ledger are the usual suspects.

Producing the workpaper

Once gross, refunds, tax, and fees are separated correctly, the output should look the same regardless of processor: Line 1 tied to Box 1a, Line 2 showing returns, fees listed as an expense, and any unresolved gap documented rather than absorbed. 1099 Sorted reads Square's Transactions CSV natively and builds that workpaper directly, including flagging when a report looks like a deposits/payout export instead of the transaction-level one you actually need.