Do I need to file a 1099 if I paid an American contractor who lives and files taxes abroad?

[Jennifer_McCarroll]

I paid a contractor more than $600 this year via Zelle. She is American, but lives and pays taxes in France. Do I need to file a 1099 for that? Which one? 1099k?

[RBBrittain]

If she's an American it doesn't matter if she lives & pays taxes in France; the IRS taxes U.S. citizens on their worldwide income. Your contractor is supposed to file a 1040 as well as a French tax return.

However, I'm not sure if an individual paying a contractor would have to file a 1099. I know Zelle doesn't file 1099s because it doesn't hold money or process payment card transactions (unlike PayPal, Venmo, Cash App, etc.); it merely facilitates transfers between bank accounts. (Edit: Confirmed by Zelle FAQs; see https://www.zellepay.com/faq/does-zelle-report-how-much-money-i-receive-irs . Recent news reports claiming Zelle must file 1099-Ks are incorrect because Zelle is structured differently from PayPal, etc.; it connects directly to your bank account, either thru online / mobile banking or the Zelle app.)

Even if you do have to file a 1099, it won't be a 1099-K as you're not a "payment settlement entity" (like PayPal, etc. or a traditional card merchant account); maybe a 1099-MISC or 1099-NEC. Can someone else verify if even that is required here?

[Carl]

They are an american citizen. Where they may live and/or where their business is, just doesn't matter. If you paid a corporation more than $600, no 1099-NEC is required. If you paid an individual or a disregarded entity more than $600, then the 1099 is required.

[Jennifer_McCarroll]

@Carl 1099-NEC?

[Vanessa A]

A 1099-NEC is a 1099 Not Elsewhere Classified.  It is now filed in lieu of the 1099-Misc.  It is the new form to report non employee compensation. 

[RBBrittain]

@Vanessa A It actually stands for... "Non Employee Compensation". It took over the most common use of the 1099-MISC, mainly to simplify compliance with the PATH Act (which requires W-2s and NEC forms to be sent to the IRS as well as taxpayers by Jan. 31 while delaying refunds containing EITC or Additional CTC till after Feb. 15 in an attempt to combat refund fraud). The old 1099-MISC was used for both NEC (subject to the 1/31 PATH Act IRS deadline) and non-NEC income (not due to the IRS till 2/28 or 3/31); moving NEC to a separate form made it easier to understand which forms had to be sent to the IRS by 1/31.