Who Gets a 1099?

With tax season in our midst, it’s time to get it together and figure out who needs to be issued a 1099.  These are to be sent out each year by January 31st. It can be kind of confusing to figure out who to issue a 1099 and who doesn’t need one. The basic rule is that you must issue one whenever you pay an independent contractor who provides you a service.

Below is a decision-making tool to help you decide if you should send a 1099. Follow the bolded questions, choose between the options given, and follow the arrows until you find your answer.

WHAT DID YOU PAY THE VENDOR FOR?

Rent → Did you pay over $600?

  • No → Do not issue 1099

  • Yes → How was it paid?

    • PayPal or Credit Card  (PP or CC)

      • Yes → However, you do not have to issue the 1099, PP or CC will issue it.

    • From Your Bank Account via Check, Bank Draft or Debit Card

      • Yes → Issue 1099

      • No → Is the vendor a corporation (either C corp or S corp)?

        • No → Issue 1099

        • Yes → Do not issue 1099

Services → Did you pay over $600?

  • No → Do not issue 1099

  • Yes → How was it paid?

    • PayPal or Credit Card  (PP or CC)

      • Yes → However, you do not have to issue the 1099, PP or CC will issue it.

    • From Your Bank Account via Check, Bank Draft or Debit Card

      • Yes → Issue 1099

      • No → Is the vendor a corporation (either C corp or S corp)?

        • No → Issue 1099

        • Yes → Do not issue 1099

Royalties → Did you pay over $10?

  • No → Do not issue 1099

  • Yes → How was it paid?

    • PayPal or Credit Card  (PP or CC)

      • Yes → However, you do not have to issue the 1099, PP or CC will issue it.

    • From Your Bank Account via Check, Bank Draft or Debit Card Yes → Issue 1099

      • No → Is the vendor a corporation (either C corp or S corp)?

        • No → Issue 1099

        • Yes → Do not issue 1099

Did you pay an attorney?

      • Yes → Issue 1099, regardless of how much you paid or whether or not they are a corporation.  Attorney’s always get a 1099.