topic So what to do? in Get your taxes done using TurboTax

I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

andrewe — Fri, 07 Jun 2019 22:58:38 GMT

I've heard that I do not need to send a 1099-MISC to a contractor if I paid them through PayPal, even if they made more than $600. Is this correct?

Yes, you are correct that you do not need to send Form 10...

PatriciaV — Fri, 07 Jun 2019 22:58:39 GMT

Yes, you are correct that you do not need to send Form 1099-MISC.

According to the IRS Instructions for Form 1099-MISC, "Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K."

In short, PayPal will issue Form 1099-K to your contractor. So you do not need to send Form 1099-MISC.

Thank you PatriciaV. Where would I report the payments I...

andrewe — Fri, 07 Jun 2019 22:58:41 GMT

Thank you PatriciaV. Where would I report the payments I made to her if not via a 1099 MISC?

PayPal will report the income to the contractor for you....

PatriciaV — Fri, 07 Jun 2019 22:58:43 GMT

PayPal will report the income to the contractor for you. Include in your business expenses for whatever services you received.

Great, thank you for the quick answers. I appreciate your...

andrewe — Fri, 07 Jun 2019 22:58:44 GMT

Great, thank you for the quick answers. I appreciate your time!

PayPal says they only issue 1099ks if there is more than...

david37 — Fri, 07 Jun 2019 22:58:46 GMT

PayPal says they only issue 1099ks if there is more than $20,000

So what to do?

david37 — Fri, 07 Jun 2019 22:58:47 GMT

So what to do?

The burden of reporting payments through PayPal resides w...

PatriciaV — Fri, 07 Jun 2019 22:58:49 GMT

The burden of reporting payments through PayPal resides with the payment processor. For payments under the PayPal minimum, vendors are expected to report their own income. You do not need to prepare a 1099-MISC in this situation.

If I own a construction business and fire a sub contracto...

elitecaliberprop — Fri, 07 Jun 2019 22:58:50 GMT

If I own a construction business and fire a sub contractor to do a roof, plumbing etc. is a 1099 the proper way to annotate those payments?

Yes

tahill66 — Fri, 07 Jun 2019 22:58:52 GMT

Yes

Re: Yes, you are correct that you do not need to send Form 10...

WPNeal — Mon, 19 Aug 2019 14:05:39 GMT

There are two choices in sending money: to a friend, to pay for services. Is the answer the same? I believe I have sent money via friend by mistake (the new dashboard no longer offers a clear choice). So far its only a $300 but could go over the $600.

A second question - if i pay someone $1000, then how does PayPal not sending anything until its over $20k remove me of the obligation to file a 1099?

Re: Yes, you are correct that you do not need to send Form 10...

xmasbaby0 — Mon, 19 Aug 2019 14:39:32 GMT

@WPNeal

Your question was posted to a an old thread that has a real mish-mosh of questions about PayPal, 1099"s etc. that may or may not be relevant to your own issue. It would be better for you to re-post your question as a brand new fresh thread --in which you are more specific about your situation. You do not say here why you paid your friend. You did not say if you have a business yourself or if you just paid a buddy for helping you do something around your home, etc. We need more information.

Re: I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

wiseman — Tue, 03 Dec 2019 06:02:53 GMT

How about payment via Zelle$?

Re: I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

xmasbaby0 — Tue, 03 Dec 2019 11:09:31 GMT

@wiseman Please read the reply directly above your own post.

Re: Yes, you are correct that you do not need to send Form 10...

CarterBear — Thu, 11 Feb 2021 13:55:11 GMT

What about the fees I incurred when sending funds via Family and Family option on PayPaL? Can I include the fees on the 1099 sent to the contractor? He requested that I use this method to pay him. The fees were for his benefit, can I pass the amt on to the contractor?

Re: Yes, you are correct that you do not need to send Form 10...

Irene2805 — Thu, 11 Feb 2021 15:18:49 GMT

You can take the fees related to the payments to the contractor as a business expense on your business return (Schedule C). They are not included on the 1099-K issued by PayPal.

@CarterBear

Re: I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

Jennifer_McCarroll — Fri, 16 Apr 2021 07:31:42 GMT

Is the original (best) answer to the original question still true now in April 2021? (It was posted in 2019) i.e. that I do not have to submit a 1099-MISC and that PayPal will submit a 1099-K as needed?

Re: I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

KristinaK — Sun, 18 Apr 2021 20:37:41 GMT

Yes, the answer by PatriciaV is still valid.

Re: I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

NumbersNumbers — Fri, 21 Jan 2022 22:46:19 GMT

I find it hard to believe the IRS would allow a $20,000 loophole:

—i.e. that a service provider could be paid $19,999 via PayPal and not get a 1099-NEC or a 1099K!

I confirmed today via Message from within my client’s PayPal account that PayPal does not issue a 1099K unless the recipient received $20,000 or 200 transactions.

https://www.paypal.com/us/smarthelp/article/will-paypal-report-my-business-sales-to-the-irs-faq729

So what is the authoritative link/reference/website saying that if my client’s business paid for business services > $600 they do NOT need to issue a 1099-NEC to their independent contractor just because payment was issued through PayPal?

No less than 5 of us CPA’s have been on the phone and emailing today discussing this question.

Re: I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

AmyC — Fri, 21 Jan 2022 23:42:25 GMT

You must send the form if you meet the requirements.

Begin with the IRS, Instructions for Forms 1099-MISC and 1099-NEC, Miscellaneous Income and Nonemployee Compensation,

This takes us to Box 1 on page 10 which states:

What is NEC? If the following four conditions are met, you must generally report a payment as NEC.

• You made the payment to someone who is not your employee.

• You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).

• You made the payment to an individual, partnership, estate, or, in some cases, a corporation.

• You made payments to the payee of at least $600 during the year.

@NumbersNumbers