Question

I paid a contractor (more than $600) through Paypal. Do I need to send them a 1099-MISC?

Forum|Forum|6 years ago
June 7, 2019
3 replies
0 views

I've heard that I do not need to send a 1099-MISC to a contractor if I paid them through PayPal, even if they made more than $600. Is this correct?

TurboTax Business Windows

PatriciaV

Employee

Yes, you are correct that you do not need to send Form 1099-MISC.

According to the IRS Instructions for Form 1099-MISC, "Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K."

In short, PayPal will issue Form 1099-K to your contractor. So you do not need to send Form 1099-MISC.

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A

andreweAuthor

Thank you PatriciaV. Where would I report the payments I made to her if not via a 1099 MISC?

W

wiseman

How about payment via Zelle$?

X

xmasbaby0

Employee

@wiseman Please read the reply directly above your own post.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

J

Jennifer_McCarroll

Is the original (best) answer to the original question still true now in April 2021? (It was posted in 2019) i.e. that I do not have to submit a 1099-MISC and that PayPal will submit a 1099-K as needed?

K

KristinaK

Employee

Yes, the answer by PatriciaV is still valid.

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N

NumbersNumbers

I find it hard to believe the IRS would allow a $20,000 loophole:

—i.e. that a service provider could be paid $19,999 via PayPal and not get a 1099-NEC or a 1099K!

I confirmed today via Message from within my client’s PayPal account that PayPal does not issue a 1099K unless the recipient received $20,000 or 200 transactions.

https://www.paypal.com/us/smarthelp/article/will-paypal-report-my-business-sales-to-the-irs-faq729

So what is the authoritative link/reference/website saying that if my client’s business paid for business services > $600 they do NOT need to issue a 1099-NEC to their independent contractor just because payment was issued through PayPal?

No less than 5 of us CPA’s have been on the phone and emailing today discussing this question.