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Do You Need to Issue 1099-Misc Forms to Contractors Paid Via Credit Card or PayPal?

We often get the question from clients on whether or not they need to issue a Form-1099 Misc to independent subcontractors if they pay them using a credit card or PayPal.

The answer is that you do not.

This applies even if you paid the contractor over $600, which is the normal threshold for being required to issue a Form 1099-Misc to someone. The reason you do not need to issue a Form 1099-Misc to any contractors you paid via credit card or PayPal is because the payment companies are responsible for reporting the totals. So for example the credit card company will issue the subcontractor a Form 1099-K for the payments which takes care of the reporting requirements.

Please consult your tax advisor on all the above issues.

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