taxes, accounting, contractorsI have contractors that I’ve been paying through PayPal. (My business is similar to Uber/Lyft/Mechanical Turk/Postmates/etc in that I have a lot of workers who essentially do work for someone else – like those businesses, I’m basically an intermediary.) If I’ve paid them under $20K through PayPal, do I need to be sending them any tax documents? I’ve been conflicting information on this.
On the one hand, my accountant told me that I do need to file a 1099-MISC to anyone I’ve paid over $600 ($600 is the minimum requirement for a 1099-MISC). However, someone else told me that since I’ve been paying my contractors through PayPal (not via cash or check), there’s actually a different and relatively new 1099-K form (which AFAICT is for credit card payments, or payments through third party transactors) that this would be subject to, where the minimum is $20K or 200 transactions. (More info here: http://smallbiztrends.com/2015/01/1099-contractors-paypal-credit-card.html)
When I asked my accountant about the 1099-K and if this was true, he basically shrugged and said nope, this wasn’t true, but the way he answered wasn’t very confident and I’m not sure to trust how up to date he is on the new 1099-K form.
Does anyone have experience with this? I’ll probably ask another accountant as well, but I figured I’d check here for any information as well. Not sure if there’s another StackExchange this would be better suited for.
The 1099-MISC form is proof that an individual is self-employed and is earning income. Your contractors need this to file their own taxes.
If they received more than 20k in revenue, PayPal will give them a 1099-K form (given that they have a PayPal business account). This will be the form that they will use to file their own taxes.
So to sum things up, you do not need to send them anything, as PayPal will provide these forms for them.
Source: I spoke to a PayPal representative through the phone about this issue not too long ago.
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