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HOW TO: 1099

 

If you pay someone more than $600 while doing business, you may be required to issue them a form 1099. Read on to learn more….

This information is gleaned from Artemis Tax (a fabulous Accounting Firm in Portland, OR)

 
 

1. Does this apply to me?

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If you’re self-employed (*all business structures), then this applies to you. It also may apply to you if you have rentals (including short-term rentals, like Airbnb).

It does NOT apply to you if you pay someone for a personal or household task.

Examples:

  • Paying someone to wash the windows in your home? NO
  • Paying someone to wash the windows for your retail storefront? YES
  • Paying someone to do improvements on your rental property? YES
  • Paying your personal rent on your home? NO
  • Paying rent for your commercial space? YES

2. Does it matter who I’m paying or what I’m paying them for?

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Yes!

  • If you are paying a corporation, then you do not need to issue them a 1099 (remember that an LLC is NOT necessarily a corporation, you will need the LLC to complete a W-9 Form
  • If you are paying your rent to a property management company (instead of the building owner), then you may not need to issue a 1099.
  • A new requirement for issuing a Form 1099-MISC is if your client made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.

3. What if I use a 3rd party payment processor to make payments (ie venmo, square, PayPal, etc)?

 

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For 2025 - If you use third party payment processors (i.e. PayPal, Venmo, Square, Stripe, etc.) to receive income for your business, then a 1099-K will be issued and filed with the IRS by the third party processor if your business is paid $2500 or more during the year for goods and services, with no minimum number of transactions requirement. Also, if you PAY folks via your business' third party payment processor then, technically, the third party payment processor should be issuing a 1099-K to your client. (*For 2024 the threshold was $5000)

The IRS is reporting that the threshold for generating a 1099-K is gradually making its way down: $5000 in 2024, $2500 in 2025, to $600 2026 and beyond. Keep an eye on the news and our website for updates!

  • Example: Assume that Jane bills her client $7500 in 2025 and the client pays her via PayPal. The client DOES NOT FILE Form 1099-NEC to report the payment. Instead, PayPal will file Form 1099-K reporting the $7500 (and any additional income that Jane earned via PayPal during the 2024 tax year) to the IRS because it exceeds the $2500 threshold.

The 1099K is only filed for transactions related to the purchase or sale of goods and/or services. This may mean the sale of a personal item like a vehicle, art, etc., but it doesn't include reimbursing a friend for a meal or paying your portion of rent to a housemate.

  • Expect PayPal & others to ask you for your taxpayer identification number (TIN) (your Social Security number or Employer Identification Number).

> What does this mean to me?

  • **If you are using third party processors to send or receive money for your business, then make sure that the third party payment processor has your Tax Payer Identification Number (this could be a Social Security Number, Employer Identification Number or ITIN).

  • **If you are paying people for NON-business transactions then make sure to select “Friends + Family” or use a personal account.

  • **If you are paying someone for goods and services then select “Goods + Services” and set up a business account with PayPal, Venmo, Square, or Stripe etc.

**--------------------------------------------*

4. What do I need to get from the person I’m paying?

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You should get a W-9 Form Form from anyone that you pay in your trade or business. This form will ask the recipient to report if they are a corporation (in which case you’re off the hook!), their tax ID number (usually their SSN or EIN), and their business name/address, all of which you will use to prepare and issue the 1099.

file

We HIGHLY recommend getting this form BEFORE you cut the first check. That way you have it on file and you don’t need to worry about chasing them down under a short deadline.

5. So when are they due?
And how do I do it, anyway?

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  • Forms 1099 are due to the recipients by January 31st each year. 1099 forms that report amounts paid to subcontractors or “Non-Employee Compensation” are due to the IRS and Oregon by January 31st. All 1099 forms you are filing (Except for 1099-INT for interest paid on a personal loan or note payable) will need to be filed with the IRS and also filed on the Oregon I-Wire System.

  • E-filing is the easiest method for filing 1099, and there are many options for doing this. We have used efile4biz.com , which will both file electronically and deliver to the recipient. We've also heard great things about tax1099.com . *Make sure that you select to file with Oregon as well. If you forget to select that option when filing, then you will need to do this separately by January 31st using iWire.

  • If you don’t have that many 1099’s to issue, you can prepare paper copies on your own. Order free forms from the IRS (give yourself at least 14 business days for the IRS forms to arrive). Most office supply stores sell the 1099 forms.

If you are looking to have 1099s prepared for you:

Shift is outsourcing 1099 prep to Gemini Accounting LLC. You can contact them here for details. Their deadline for receiving info for timely filing of your 1099s is January 20th, 2025.

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1099 Prep - Info required for Gemini Accounting LLC is listed below:

  • Here is the information Gemini will need: 

    • Completed W9 Forms for all recipients

    • Itemized List of how much you paid each independent contractor or landlord (please specify if the payments were made for services, rents, or royalties)

    • Payment Method - In light of the 1099 rules changing, it’s helpful to know “how” you paid folks, i.e. check, cash, credit card, venmo, etc. 

    • Info about your business: 

      • Legal Company name or Sole Prop Name registered for the business

      • Business Entity type

      • Address for the business

      • Telephone

      • Contact person's name for the company 

      • Your Current Tax ID number (EIN, SSN or ITIN)

      • Email address for recipient (if you’d like them to receive their 1099 document electronically)