Deductible expense when pay small contractor

[thluong85]

Hello,

I understand that if I pay a contractor less than $600 a year I don't have to file 1099-NEC. But when I claim that amount as deductible expense for business, do I still need tax ID or any info from the contractor? What does IRS require for expenses less than $600 to contractors?

[SharonD007 · Accepted solution]

No, you don't need a tax ID to report the expense that you paid the contractor that's under $600. Just keep your invoice and other substantiation if you are questioned by the IRS.

The requirement from the IRS states that you aren't required to file a 1099-MISC (information return) if the sum of all payments made to the person or unincorporated business is less than $600. 

Refer to the IRS FAQ  Am I Required to File a Form 1099 or Other Information Return?

[thluong85]

Thank you!