Author Topic: 1099 reporting requirements  (Read 1407 times)

jpdx

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1099 reporting requirements
« on: December 15, 2018, 03:29:37 PM »
I would like to confirm that there have been no changes to the 1099-MISC / 1099-K reporting requirements as part of the TCJA.

Specifically, I want to ensure that if I pay a contractor via PayPal, it remains true that I do not need to generate a 1099-MISC. Explained in detail here:

https://www.forbes.com/sites/kellyphillipserb/2014/08/29/credit-cards-the-irs-form-1099-k-and-the-19399-reporting-hole/#56a370271ae8


secondcor521

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Re: 1099 reporting requirements
« Reply #1 on: December 15, 2018, 05:32:30 PM »
I thought it depended on the amount you paid the contractor, not the method of payment.  $600, maybe?

terran

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Re: 1099 reporting requirements
« Reply #2 on: December 15, 2018, 09:11:44 PM »
I thought it depended on the amount you paid the contractor, not the method of payment.  $600, maybe?


That's my understanding as well.

MDM

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Re: 1099 reporting requirements
« Reply #3 on: December 15, 2018, 09:44:11 PM »
The linked article seems well written and using appropriate sources. 

How do you read the pertinent IRS regs?

jpdx

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Re: 1099 reporting requirements
« Reply #4 on: December 16, 2018, 07:16:49 PM »
The article explains that even amounts over $600 do not require a 1099-MISC if the contractor was payed through a third party payment processor like PayPal. I was surprised when I first learned this from an accountant.

MDM

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Re: 1099 reporting requirements
« Reply #5 on: December 16, 2018, 07:29:30 PM »
The article explains that even amounts over $600 do not require a 1099-MISC if the contractor was payed through a third party payment processor like PayPal. I was surprised when I first learned this from an accountant.
That's how I read it also.

katsiki

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Re: 1099 reporting requirements
« Reply #6 on: December 18, 2018, 05:48:10 PM »
That seems like an amazing way to get around extra paperwork.

jpdx

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Re: 1099 reporting requirements
« Reply #7 on: December 21, 2018, 03:53:53 PM »
Indeed it is! It saves me a lot of time every January so I can focus on real work. FWIW, I always make sure my contractors know they have to include all their income on their tax return whether they receive a 1099 or not.

To my original question, which is unanswered, there is no change to this policy since the new tax law, correct? I am assuming nothing has changed but I would like to confirm. Thanks.

secondcor521

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Re: 1099 reporting requirements
« Reply #8 on: December 21, 2018, 10:55:51 PM »
Indeed it is! It saves me a lot of time every January so I can focus on real work. FWIW, I always make sure my contractors know they have to include all their income on their tax return whether they receive a 1099 or not.

To my original question, which is unanswered, there is no change to this policy since the new tax law, correct? I am assuming nothing has changed but I would like to confirm. Thanks.

I don't know of any, but if I were you I would find the full text of the TCJA online (it's out there somewhere in PDF form) and then do some keyword searches to see if anything shows up.

MDM

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Re: 1099 reporting requirements
« Reply #9 on: December 21, 2018, 11:54:49 PM »
In https://www.irs.gov/pub/irs-utl/irdm_section_6050w_faqs_7_23_11.pdf one finds
Quote
Section  6050W  explicitly  grants  the  Secretary the  power  to  draft  regulations  to  prevent duplicative  reporting  of  the  same  transaction.   
The  final  regulations  under  section  6050W  (the new  payment  card  reporting  requirements)  provide that  payment  card  and  third  party  network 
transactions that otherwise would be reportable both under section 6041 or 6041A(a) and under section 6050W must be reported under section 6050W and not under section 6041 or 6041A(a). 
In other words, Congress told the IRS to "work out the details" on how to determine exactly what form should be used.

After some consideration, the IRS released Final Regs for Payment Card and Third-Party Network Information Reporting.

One can read both the reasoning behind, and the actual text of, those regulations at Internal Revenue Bulletin: 2010-43 | TD-9496.  Note that, at first draft, amounts between $600 and $20000 would have to have been reported, but that was changed during the comment period:
Quote
Relief from reporting under section 6041 was not provided in the proposed regulations, however, for third party network transactions because these transactions are not subject to reporting under section 6050W unless the de minimis threshold (more than 200 transactions aggregating more than $20,000 per calendar year for a given payee) is met. ... The proposed regulations requested additional comments regarding the application of a rule to prevent the reporting of the same transaction more than once.

Numerous commenters requested that relief from duplicate reporting under both sections 6050W and 6041 be extended to include third party network transactions. This suggestion was adopted. Accordingly, the final regulations provide that payment card and third party network transactions that otherwise would be reportable under both sections 6041 and 6050W must be reported under section 6050W and not section 6041. The final regulations also provide that, solely for purposes of determining whether a payor is eligible for relief from reporting under section 6041, the de minimis threshold for third party network transactions in §1.6050W-1(c)(4) is disregarded because the section 6041 payor will be unable to determine whether the de minimis threshold applies.

The text of the law can be found at 26 CFR 1.6041-1 (see §1.6041-1(a)(1)(iv)).

There is nothing in Text - H.R.1 - 115th Congress (2017-2018).  Aka TCJA. to change the above items.

Of course, one should do one's own due diligence.... ;)