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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

Tax Season comes around every year, yet people still always scramble come mid-February when filing has taken way like they had no idea it was coming. This tax season, that won’t be you. Follow our simple steps for preparing to file taxes - what to do before you file for an easier experience while filing. 

First and foremost, you’ll want to schedule an appointment with your tax preparer, whoever it may be. If you don’t have a tax preparer, reference our blog on how to find a reputable tax preparer you can trust. Once your appointment is scheduled, it’s time to turn to your important documents. This includes any documents that track your income, personal information, banking information, and records of any purchases.