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

[andrewe]

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?

[PatriciaV]

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.

[andrewe]

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

[PatriciaV]

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

[andrewe]

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

[david37]

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

[david37]

So what to do?

[PatriciaV]

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.

[elitecaliberprop]

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?

[tahill66]

Yes

[WPNeal]

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?

[xmasbaby0]

@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.

[wiseman]

How about payment via Zelle$?

[xmasbaby0]

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

[CarterBear]

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?