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1099Misc Required i...
 

1099Misc Required if Contractor Paid through PayPal?  

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 Jill
(@jill-4)
Joined: 5 months ago
Posts: 2
31/01/2020 1:37 pm  

A non-profit paid its contractors through 2 PayPal accounts for 2019.  Total for year about $10K-$15K per person.  Do they need to issue 1099Misc to them?  PayPal only says on its website ‘ it will issue a 1099 if it is more than $20K AND 200 + transactions’.  The Contractors said they have never received anything from PayPal, this year or prior years.

This topic was modified 4 weeks ago by Jill

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(@casey-4)
Joined: 5 months ago
Posts: 50
31/01/2020 2:23 pm  

PP will issue a 1099k, if meets their parameters.  You don't have to send them 1099's.


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 Jill
(@jill-4)
Joined: 5 months ago
Posts: 2
31/01/2020 5:09 pm  

@casey-  but the IRS guidelines are $600 & above, so if PayPal doesn’t send it because it doesn’t ‘meet their parameters, Doesn’t the business still need to send it?


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(@casey-4)
Joined: 5 months ago
Posts: 50
01/02/2020 1:08 pm  

I hear you, but no, it doesn't.  


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(@njoki)
Joined: 5 months ago
Posts: 6
12/02/2020 7:54 pm  

@jill-4

Ask the contractors to get a wages transcript from the IRS, that way they can know for sure what was reported to the IRS. I tell my clients to do this especially in the transportation industry. Sometimes what they have on their 1099's isn't what the IRS has, so I file their tax return by what was reported to the IRS through the wages transcript.

A wages transcript can be obtained from their local IRS office free of charge.

This post was modified 2 weeks ago 2 times by Njoki

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(@casey-4)
Joined: 5 months ago
Posts: 50
12/02/2020 10:35 pm  

@njoki

That makes no sense.   Wages have nothing to do with contractors payments.  Each contractor should have their own set of books, and know how much they received from their clients.  Beyond that, a contractor needs to report all income, regardless of weather it was reported to them on a 1099 or not.  If they don't already understand the needs to for their own books, it is time to educate them.


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(@oldcargirl)
Joined: 5 months ago
Posts: 20
13/02/2020 6:58 am  

@casey-4

I agree with Casey.  Also you should never force the clients tax return to match a 1099. For my employer, I currently send 1099's to vendors/contractors who have been paid in part by credit card and in part by check, only for the check portion. Also, it depends if the issuer is on cash or accrual. Too many variables can occur on 1099's, what if one got lost in the mail or was calculated wrong? Bookkeeping is what should accurately report income.

I had zero income for my own company last year, file as a S corp on accrual, yet my non profit client sent me a 2019 1099 for income in Dec 2018. The last payment they mailed me in Jan 2019. 


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 Jill
(@Jill)
Joined: 2 weeks ago
Posts: 1
15/02/2020 10:12 am  

@casey-4

😀.  Thank you for the info & help.  I told the non-profit what they were required to report but also told them to be sure each Contractor was urged to follow IRS guidelines and report ALL of their income.  


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 Don
(@don)
Joined: 5 months ago
Posts: 16
19/02/2020 4:38 am  

@oldcargirl

Well, this discussion taught me something new, I think.

Form 1099-K. 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

https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

I don't know why the issuer being on accrual versus cash basis makes any difference but after discovering this, maybe you know more than I do about it. 

The final responsibility for reporting income rests with the entity that earned/received it, IMO. 

This post was modified 1 week ago by Don

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