Who Should Be Issued A 1099 This Tax Season?

Tax season will begin soon, which means it’s time to start issuing tax forms to employees, independent contractors, and vendors. A 1099 is a tax form that describes wages paid to someone not by their employer, and must be issued by January 31. Who should you send a 1099 to this tax season? A basic rule of thumb is to issue a 1099 to anyone you paid over $600 throughout the year, but follow our flow chart for guidance.

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.