Everything you need to know about 1099s

Posted by | January 29, 2015 | Tax Tips | 73 Comments

how to fill out 1099s onlineWhat’s the deadline?
The 1099 deadline (specifically 1099-MISC) is January 31, 2017 to send 1099s to the recipients AND file them with the IRS. This is a change from previous years, so take note!

Who receives one?
If you paid $600 or more to an unincorporated person or vendor for services related to your business using cash, check, or bank transfer (ACH) you need to issue them a 1099-MISC.

What if I paid them with PayPal or credit card?
If you paid an unincorporated vendor using PayPal, credit card, or other third party merchant, the payment service is responsible for reporting this information (usually by issuing a 1099-K). You don’t have to do a thing!

How do I file these?
1. Make a list of those who meet the qualifications for receiving a 1099-MISC.
2. Send them a W-9 to collect their Taxpayer ID Number, address, and business name.
3. Create an account with 1099Online.com.
4. Create a payer which will be your business information.
5. Create the payees. This is everyone who needs to receive a 1099 (Use W-9 info).
6. Enter the amount of “nonemployee compensation” each person received.
7. Choose the option to have the 1099 mailed to the recipient. Huge time saver.
8. File the 1099s after carefully reviewing them.

What happens if I’m supposed to receive a 1099, but don’t?
You should report all income received, whether you receive a 1099 or not. No need to file one for yourself or delay your tax filing if someone doesn’t send you a 1099 or sends you a late one 🙂

*UPDATED for 2017

Amy Northard, CPA

The Accountant for Creatives
+ taxes + bookkeeping + consulting
+ Hang out with me over on Instagram!

73 Comments

  • Hayley says:

    Hi Amy!

    I have one person whom I paid $300 via PayPal and $300 via check. I’m assuming I should still issue her a 1099?

    Thanks!

    Hayley

    • Amy Northard, CPA says:

      Hi Hayley!

      Great question – you actually won’t need to issue a 1099 since only $300 was paid via check and the rest with PayPal.

      -Amy

  • Crystal says:

    What do if the date is 3/2/15 and you’re just realizing all of this? I can get the w-9 quickly, but can I still send one to the vendor and the IRS by EOD?

    • Amy Northard, CPA says:

      Hi Crystal,

      If using 1099online.com, you can email your vendor the 1099 once you’ve completed the 1099 form. Then, once you’ve submitted it, USUALLY that’s the date recognized by the IRS so you shouldn’t face any penalties.

      Hope that helps!
      Amy

  • Lisa says:

    Hi Amy!

    What if the payee is outside of the U.S. (i.e. Canada or elsewhere)? Are there special forms I might need to complete for an international service relationship for something like virtual assisting, graphic design, etc? Thank you!

    • Amy Northard, CPA says:

      Great question! As long as the contractor is a non-US citizen and performed all work outside of the United States, then you don’t need to issue a 1099. The formal way of requesting that info is by using Form W-8BEN. They would need to fill out part 1 and part 3 of the form if you paid them over $600. You would hang on to the form for your records in case you were ever audited.

  • What about paying an independent contractor using the square cash app thus using my debit card to pay them? Do I still need to file a 1099-misc for that contractor? THANKS SO MUCH Amy!!! I recommend you and your services everywhere!

    • Amy Northard, CPA says:

      Since you’re paying through Square, that counts as a merchant processor (like PayPal) and you wouldn’t need to issue a 1099.

      Thanks for the recommendations 🙂

      • Shelly says:

        Hi Amy,
        Thank so much thank you for the info. I’m unclear about how paying via Square Cash or Paypal means no 1099 needs to be issued. Further what about using Venmo?

        Thanks Shelly

        • Amy Northard, CPA says:

          Great question Shelly! Credit card companies and payment processors (PayPal, Square, etc) take care of reporting the electronic payments to the IRS.

          • Shelly says:

            Thanks for the info. Makes me think going forward I should pay all my contractors and rent via a payment processor, then no 1099s need to be issued.

          • Amy Northard, CPA says:

            Yep, that is an option to cut down on work for yourself!

          • Great question, Shelly! And, Amy, I’d like to clarify something, too, since I paid one of my contractors using PayPal but not using the Business option, I chose Friends & Family so as to avoid the fees, and the other contractor with my personal credit card, is it still the case that I do not need to issue a 1099 for either one? And if that is the case, is there anything I am to do to somehow claim this or do I simply need the proof of these payments when I go to submit my own taxes?

          • Amy Northard, CPA says:

            Payments made through PayPal’s friends and family option aren’t reported through the payment processor, so you’ll need to issue them a 1099. You won’t need to issue one for the payment made with your credit card. Include these payments as regular expenses and keep on hand verification of those payments (email receipts, etc).

          • Teresa says:

            Hello Amy, wanted to ask a question with respect to this. If a payment was made through Venmo for services but through a bank account (not credit card) would a 1099 need to be filed by me, or will this come from Venmo? Thank you in advance for your help.

          • Amy Northard, CPA says:

            According to Venmo’s support, they don’t consider themselves as a merchant processor, so they don’t issue 1099s themselves. Because of that, you will need to include Venmo payments when coming up with the total payments to report on 1099s.

  • Amber says:

    If you don’t file 1099s, and leave it to them to report (and you’re both okay with that) will you get in trouble?

    • Amy Northard, CPA says:

      If you were audited and the IRS found out that you didn’t submit the 1099s that you’re required to file, you could be assessed a fine of $100 per form not filed.

  • Jenna says:

    Hi Amy! Thanks for posting this (and thanks to Melissa for sharing it on Facebook today)!!

    If I did over $600 of work for a company, but I’m registered as an LLC, do they still owe me a 1099?

    • Amy Northard, CPA says:

      Hi Jenna – If you’re a single-owner LLC and file your business taxes on a Schedule C, then they would owe you a 1099.

  • Kristen says:

    Love this post! So helpful! Thanks Amy!!! YOU KNOW EVERYTHING!!

  • Heather K says:

    Just to clarify, this is just for *services*? If, for example, I buy a item for my business, that’s different? I bought a computer for business use from my BIL. ($1200) He’s not a business, he sold it to me as an individual, but I plan to count is as a deductible expense. Do I still 1099 him?

    Also: since he’s not a business, he didn’t charge me sales tax, obviously. So, would I (my gut says I gotta pay Michigan SOMETHING haha. But he wouldn’t charge sales tax since he’s not a business… so I’m left with use tax…? Blah!)

  • Lisa says:

    Hi Amy!
    What’s recommended for sole-proprietors whose (individuals or SMALL biz) clients pay via check?

    When they don’t know about providing 1099s is it on the service provider to educate them about 1099s and the process? Should that be a part of the job/contract process?

    • Amy Northard, CPA says:

      Great question! It’s completely on them to know the rules of owning a business and filing the 1099s. You would never be penalized for not receiving one. You’re welcome to educate them, but I wouldn’t make extra work for yourself 🙂

  • CoryH says:

    I started a job earlier this year as a independent (sub) contractor, and just received my 1099 misc form. Since I am new to this 1099 form, I am kind of lost on how to go about filing. I am not married, but have three children that live with me. What are the steps I should take if I plan to file for a return?

    • Amy Northard, CPA says:

      If you have expenses related to your independent contractor income, you’ll file your regular tax return (1040) but you’ll also file a Schedule C form which is where you’ll report the contractor income and related expenses. If you use a program like TurboTax, they will walk you through all applicable deductions.

      If you don’t have any related expenses, then you can report the income as “other income” on your 1040 tax return and skip the Schedule C form.

  • Annalise says:

    Hi Amy!

    Similar to Jenna’s question, if you’re a Sole Proproprietor and file my taxes on a Schedule C, then they would also owe me a 1099, as well, yes?

    Thank you – great post!

    • Amy Northard, CPA says:

      Yep, that’s correct! But it’s up to them to send it. As long as you report all the income you received, you don’t need to wait for 1099s to be issued to you.

  • Billie says:

    Hi Amy!

    Thanks for the great article!

    You mention that the 1099 deadline (specifically 1099-MISC) is February 1st, 2016 to send 1099s to recipients. I have this part covered. The part I’m confused about is, “The deadline for filing 1099s with the IRS is February 29, 2016 if you file paper forms or March 31 if you file them electronically.”. Does that mean I need to file all my taxes by those dates instead of April 15?

    Thanks!

    • Amy Northard, CPA says:

      Hi Billie,

      I probably need to word that better. The deadline for sending the recipient copy of the 1099 to the recipient (only) is Feb. 1st. The rest of the copies will be filed (by themselves and not with your actual tax return) by February 29th (or March 31 if filed electronically). You still have until April 15 to file your annual income taxes.

  • Jeff says:

    Hey Amy. I have a situation where I performed work in November 2015 and was issued a check. I never received the check and had the company reissue it. The check was voided and reissued in January 2016. The check was received and deposited shortly after. Should I record this as income in 2015 or 2016?

    Thanks for your help!

    • Amy Northard, CPA says:

      Hi Jeff – If your business operates on the cash basis (most small businesses do), you’ll report the income based on when you actually had the money in your account (2016). Just make sure that they don’t issue you a 1099 showing 2015 income of this amount.

  • Dee says:

    Odd question probably…I was dating a guy who gifted me about $1200 over the last year to pay for my race fees, etc. (I’m an athlete). Anyway, we broke up in January and it was kind of ugly. He said he was filing a 1099 since he gifted that money through his business (which I was unaware of) to “get me back” and he wanted to write that money off, which seems to me is fraud. Anyway, I never filled out a w-9 or received a 1099, but I’m not sure what to do. I don’t want to get in trouble with the IRS if he does actually file it even though I thought it was a gift, not income. He didn’t have any of my information either except my name and I guess my address and phone number. He may not have even done anything, but I don’t want to be in trouble.
    Thanks so much

    • Amy Northard, CPA says:

      Hi Dee – If he does file the 1099, you should receive a copy so you’ll know whether or not he files it. If you do receive the 1099, I would recommend contacting a tax attorney who can guide you through the process of disputing the 1099.

  • Jeremy L. says:

    If I pay a person/subcontractors to their birth name and social security ( not a llc or business), have them fill out a w9,
    Pay with my company checks, and send out the 1099 form at end of year. Then they do not file taxes, am I still good for writing off the expense and not being responsible for the tax?
    What is my best options?

    Thanks

    • Amy Northard, CPA says:

      Hi Jeremy – Yes, you are not responsible for the other party and whether or not they pay taxes.

  • Jerry says:

    If a vendor was paid with checks for the first half of the year and then agrees to be paid via a VCN (virtual credit card number) going forward, should the 1099 that is issued the following year only include the amounts paid with a check or since they agreed to be paid with a VCN (virtual credit card number), does a 1099 need to be issued at all for that year? For example, they were paid $700 with a check and then paid $800 with a VCN. Should I issue a 1099 in the amount of $700.00 in order to report the payment made by check? Or is no 1099 needed because they are now accepting payments via a VCN? Thanks for your help.

    • Amy Northard, CPA says:

      You would issue the 1099 for the amount paid through checks. So for your example, you would issue the 1099 for the $700.

  • Viji Natarajan says:

    If I made several payments totaling more than $600, should I file them all separately or may I do it all at once?

  • Katie says:

    Hi Amy!
    I looked through the comments, and apologize if this has already been answered! I was a contracted second shooter for different photographers this year (and they made the checks out to my personal name, rather than my LLC). I was paid over $600 from one photographer (two separate weddings) but the others I worked for, I made less than $600 from each of them. Do I report absolutely everything that earned (from every photographer that I worked for) or just the instances where it totaled more than $600 from a specific photographer? Sorry for any confusion.

  • Deborah Langlois says:

    If I an not sure about whether a business is an LLC or incorporated since they didn’t fill out a W-9 and are not returning my calls, and I send them a 1099. What happens if I am wrong and should not have sent one?

    • Amy Northard, CPA says:

      Nothing will happen. Just keep documentation that you tried to reach out to them to get the necessary info. Better to file a 1099 that didn’t need to be filed than to not file it.

  • Harrison says:

    If you are paying a vendor an advance prior to year end for next January 2017, should the amount paid be included in the 2016 1099?

  • Ann says:

    I have a real estate agent that gets 1099’d for real estate related sales and leases. She also is a virtual assistant for my office and works remotely on various projects regularly and also works for other companies as a virtual assistant. Should I combine the two amounts into one 1099 or should I send her two 1099’s?

    • Amy Northard, CPA says:

      Hi Ann – If both payments are made from your one business, you should combine the two amounts since they’re both reported in box 7 (Nonemployee Compensation) of the 1099-MISC form.

  • Vanessa says:

    What about you hire a second shooter and stick with them for the duration of the year? Would you be sending them a 1099 if I paid them by cash, check, or bank transfer?

    • Amy Northard, CPA says:

      If you paid them $600 or more over the course of the year via cash, check or bank transfer, you’ll need to issue them a 1099. It doesn’t matter if you used them once or several times throughout the year.

  • Crystal says:

    Hi Amy,

    I purchased some photography equipment from someone on Craigslist by cash for $800 last year. I’m assuming from this article that I need to pay use tax, but of course I don’t have any information for them, including name, address, anything. What do I do in this case?

    • Amy Northard, CPA says:

      Hi Crystal – If you purchased equipment and didn’t pay sales tax, you will need to pay Use Tax to your state. That will be different than a 1099-MISC and you shouldn’t need their info to report it to your state.

  • Jess says:

    Just for clarification purposes, do debit cards count the same as credit cards?

    I have two hair and makeup artists that I pay at each session we work on together. For 2016 I paid them via my Paypal debit card using their card swipers on their phone. For 2017 I’ll be using my bank debit card.

    I assume based on what you’ve said above, that I would be covered since I’m using a card through their card swiper>

    • Amy Northard, CPA says:

      Hi Jess – Debit cards do count the same as credit cards. You are correct that you wouldn’t need to worry about a 1099 since you paid via PayPal/debit/credit card.

  • Sophia says:

    Hi Amy, great article! Not sure if my last question went through so I’m reposting. My question is around vendors who I pay on behalf of my clients. For example, I hired a sound company on behalf of my client for their event, I paid the sound company with a personal check and was then reimbursed by my client. Should I be sending the sound company a 1099?

    Thanks!

    • Amy Northard, CPA says:

      Hi Sophia – Since you were the one paying the vendors, you will be responsible for issuing 1099s if the payments meet the requirements.

  • Greg says:

    Hi Amy, If we made a $1000 payment to a vendor by check on December 20, 2016. If that check was voided on January 15, 2017 and a new check was issued. In what year does the payment need to be reflected on a 1099?
    Thanks,

  • Andrew says:

    What if we cut a check prior to December and it was for contractor services in January. Contractor was not given check until January. We then issued 1099 the year check was cut. Do we need to amend 1099? 1099 was generated from accounting software based on when the check are cut. Thanks.

    • Amy Northard, CPA says:

      If you held onto it until the next year and they didn’t have the ability to cash it until the next year, it should be included in the following year’s 1099.

      From the contractor standpoint, they technically shouldn’t have to report income for a year they didn’t even have access to the funds in.

      Hope that helps!

  • Abby says:

    Hi there! I have charged some customers through Square and others through PayPal. If neither one of them equal up to $20,000 separately but are more than $20,000 combined, do I still need to sumbit this to the IRS? Thank you!

    • Amy Northard, CPA says:

      Hi Abby! It won’t matter if it adds up to $20k combined or separately. If you paid them through a merchant processor, you don’t need to issue a 1099.

  • Ananta says:

    Hi Amy,
    As a contractor, I did part time work for some client company and received a check of $ 1100 for that work.
    I later realized that I am legally not allowed to do part time work in the first place.

    I am planning to not encash that check so as to not get into legal issues.

    In this case can the client company still issue me 1099-MISC for the check they have drawn.

    Thanks
    Ananta

    • Amy Northard, CPA says:

      Hi Ananta,

      They can still issue you a 1099 so I’d go back to the company and ask them to cancel the check so they don’t issue you a 1099 for that amount.

      Thanks,
      Amy

Leave a Reply

Your email address will not be published.

Are things like taxes & bookkeeping getting in the way of your creative time? Let's Chat!
Bookkeeping & Tax Tips
Sign up for free tax tips and advice sent straight to your inbox!