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Company vs. Independent Contractor?

Forum|Forum|5 years ago
December 24, 2020
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I file 1099-MISC for the landowners I pay land rent to. I also have generally issued a 1099-MISC to anyone who I pay more than $600 for work on my rental properties. I see that now I need to issue a 1099-NEC to independent contractors that I pay more than $600. I'm curious: how do I determine who is an independent contractor and who is working for a company? For instance: a fence company, owned by the person performing the work. My guess is that I need to send them a W9 and then issue a 1099-NEC. I base this on that they don't list themselves as an LLC or other business type. Am I doing this correctly? I assume its better to err on the side of requesting a W9 for anyone performing work for me?

Not A Product Question

Best answer by M-MTax

Better to err on the side of caution so you're doing the right thing.

M-MTaxAnswer

Better to err on the side of caution so you're doing the right thing.

macuser_22

Employee

If, in the course of doing business, your business pays another business more then 600 then the 1099-NEC is required. It does not matter whether the actual person doing the work is an employee of another business or has their own business (independent contractor). You give them a W-9 to fill out and return to you that will tell you who to issue the 1099 to and the EIN or SSN of the business.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

Critter-3

BEFORE you pay anyone a single $ have them fill in the W-9. You do not need to issue anyone a 1099 if you pay them by Credit Card or if they are incorporated ( not just an LLC).

M

markporterAuthor

Thanks, but why does paying via credit card as opposed to a check matter? As far as I'm aware, neither my credit card company nor my credit union does any sort of reporting on my payments to the IRS. So I'm not really sure what the difference is. Cash payments I totally get!