1099-NECs are for non-employee compensation above $600 during the entire year, paid via check, bank/money transfer, Cash App, etc.
There are some considerations to consider if the 1099-NEC filing process is applicable to you. It's a good idea to double-check that you do, in fact, need to file a 1099-NEC. In the event that you filed a 1099-NEC in error, you'd have to file an amendment to the IRS.
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Issuing and Receiving 1099s
Who needs to file a 1099-NEC?
A 1099-NEC is used to report non-employee compensation. You file a 1099-NEC for a contractor who fits the following criteria:
- You've paid the contractor over $600.
- They're an independent contractor, an LLC (single member or partnership), a PLLC, or a sole proprietor.
- You paid them in cash, checks, or bank transfers (including Venmo, CashApp, or Zelle)
*If the business entity is a corporation, such as Simple Practice, or a payroll provider, such as Gusto, you do not need to file a 1099-NEC.
Who doesn’t need to file a 1099-NEC?
- If you’ve paid your contractor less than $600 in the last year.
- If your contractor is a large corporation (i.e., Simple Practice).
- If your contractor’s tax entity is an S or C Corporation. In that case, you’d need to file a 1099-MISC for them.
- If you’ve paid your contractor via your payroll provider (i.e., Gusto) or through a payment processor (i.e., Stripe, Square). The payroll provider or payment processor will file the 1099-NEC on your behalf.
What are examples of typical contractors that practitioners hire?
- Seasonal helpers who come in for a specific project or time period
- Virtual Assistants
- Consultants who help with marketing, business development, or other business related activities
When is the 1099-NEC form due to my contractors?
You are required to issue a filed 1099-NEC to your contractor by February 2nd. We recommend sending it as soon as possible, as your contractor cannot file their taxes without this form.
What if I received a 1099 for my work as a contractor?
You will need to upload this during the Annual Tax Questionnaire process. You can begin working on your annual tax preparation immediately and upload it when requested by going to Taxes > Annual.
Methods of Payment
I paid my contractor with Venmo, Zelle, or Cash App. Do I need to file a 1099-NEC for them?
If your contractor isn't an S corporation or C corporation, and you paid them over $600, then yes. You'll need to file a 1099-NEC for them.
What if I paid my contractor through a payment processor?
If you paid your contractor through a payment processor, such as Stripe, Visa, Square, Clover, Ivy, or PayPal, you don't need to file a 1099-NEC. The payment processor will do that for you.
What if I paid my contractor through a payroll provider?
If you paid your contractor using a payroll provider such as Gusto, ADP, or QuickBooks, you don't need to file a 1099-NEC for them. The payroll provider will do that for you.
What if I paid my contractor less than $600 last year?
You don't need to file a 1099-NEC for them.
Contractor Tax Information
Where do I find my contractor's tax entity?
In box 3 of their W-9 form. Please request a completed copy of your contractor's W-9 form if one was not provided to you.
What if my contractor is a larger corporation?
If your contractor is a large corporation, such as Simple Practice, Alma, or Gusto, you don't need to file a 1099-NEC for them.
What if my contractor's tax entity is an S corporation or a C corporation?
You'll need to file a 1099-MISC for your contractor. You can find out more information and instructions here.
What if my contractor's tax entity is a sole proprietor, single-member LLC, or LLC partnership?
If you paid them over $600 in cash, checks, or bank transfers, then you'll need to file a 1099-NEC for them.
What if my contractor is an LLC, but they're taxed as an S corporation?
You'll need to file a 1099-MISC for your contractor. You can find out more information and instructions here.
What if I do not have the contractor’s EIN number?
You can request the EIN number from your contractor. If this contractor has a Business Name and is a business entity, you'll enter their EIN. Otherwise, enter their SSN. These identification numbers can be found in the contractor's completed W-9.
What if my contractor works internationally?
Whether you need to issue a 1099 for an international contractor depends on who they are, where they live, and where the work is done.
- U.S. citizens or residents (even if living abroad): Issue a 1099-NEC if you paid more than $600, since U.S. persons are taxed on worldwide income.
- Non-U.S. contractors working in the U.S.: Payments are often reported on Form 1042-S, though a 1099 may apply in limited cases depending on residency and withholding.
- Non-U.S. contractors working outside the U.S.: No 1099 is required; collect Form W-8BEN (individuals) or W-8BEN-E (businesses) to document foreign status. Upload the completed form to Your Practice>Documents>Taxes tab for recordkeeping
If you are unsure, you need to ask your contractor to determine their status and the appropriate filing form.