Deductible expense when pay small contractor

Forum|Forum|2 years ago
March 24, 2024
1 reply
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Hello,

I understand that if I pay a contractor less than $600 a year I don't have to file 1099-NEC. But when I claim that amount as deductible expense for business, do I still need tax ID or any info from the contractor? What does IRS require for expenses less than $600 to contractors?

Not A Product Question

Best answer by SharonD007

No, you don't need a tax ID to report the expense that you paid the contractor that's under $600. Just keep your invoice and other substantiation if you are questioned by the IRS.

The requirement from the IRS states that you aren't required to file a 1099-MISC (information return) if the sum of all payments made to the person or unincorporated business is less than $600.

Refer to the IRS FAQ Am I Required to File a Form 1099 or Other Information Return?

SharonD007Answer

No, you don't need a tax ID to report the expense that you paid the contractor that's under $600. Just keep your invoice and other substantiation if you are questioned by the IRS.

The requirement from the IRS states that you aren't required to file a 1099-MISC (information return) if the sum of all payments made to the person or unincorporated business is less than $600.

Refer to the IRS FAQ Am I Required to File a Form 1099 or Other Information Return?

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