If I paid all my contractors via PayPal, do I need to issue any 1099s?

It depends! If you pay a person or business via PayPal’s Friends and Family option, you will need to send a 1099-NEC to them. When you use this method to transfer funds, PayPal assumes it’s a non-business transaction and doesn’t include it in their 1099-K.

If you paid the contractor via PayPal business, you do not have to issue the contractor a 1099-NEC. PayPal is considered a third-party merchant and they are required to issue their own 1099 forms, called a 1099-K.

Notice: Starting with the tax year 2020, Form 1099-NEC is replacing Form 1099-MISC for non-employee payments.

 

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Amy Northard, CPA

Amy Northard, CPA

I’m Amy Northard, and I’m the founder of The Accountants for Creatives®. My team and I understand that the last thing you want to think about is taxes and bookkeeping. That’s why we handle the financial side of things for creatives across the US, giving you the freedom to get back to the work you love.

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