Filing 1099-MISC forms is a major PITA (excuse our language). Even though we have made a handy dandy feature for you to pull reports for your tax filing process, it’s still having to sit down and fill out the forms or pay someone to file it for you.
What if we told you that you won’t have to do 1099-MISC forms anymore?
The 1099-K Miracle
What is a 1099-K form? A 1099-K form is one of 15 different types of 1099 forms.
According to the IRS Instructions for Form 1099-MISC “Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. “
Our third-party network partner, Veem, files 1099-K forms for your contractors who are paid through their platform.
Some companies are interpreting the Instructions for Form 1099-MISC as meaning they should not file a 1099-MISC in this situation. Other companies incorrectly maintain that they are still under an obligation to issue a 1099-MISC. Still others are simply unaware of the changes. We are here to clear the air and spread awareness.
Old Rules, New Awesomeness
When would you send a 1099-MISC?
The 1099-MISC is used to report many different types of payments in the course of trade or business. For most platforms and marketplaces, Form 1099-MISC is generally used to report business payments over $600 independent contractors. For example, let’s say a business hired a team of event talent to help set up and run a tradeshow booth. Each talent was paid over $600 throughout the year. Each talent will then receive a 1099-MISC reporting the total payments made to them for their work.
One important caveat to emphasize: credit card payments or payments to a contractor made using a third party settlement network (TPSO), fall under the rules of a 1099-K. So, returning to the above example, let’s say a company paid event talent with a company via a third party network. The company does not need to issue them 1099-MISCs even if they were paid over $600. It’s the merchant acquiring bank’s job to send them a 1099-K if payments exceed both $20,000 and over 200 payments.
NOTE: These rules only apply if you are paying contractors via a credit card or third party network, like Veem. If you pay someone via check, cash, wire transfer, those would fall under 1099-MISC rules.
Where do I start?
Of course, we want to make sure that a system like this would work for your needs as far as your existing accounting systems and such. We offer free consultations. We won’t sell you, just inform. Schedule one here.
We pride ourselves on being problem solvers first. We’ve helped hundreds of businesses streamline their processes over the years. Long story short, not only do we give you world-class tools for talent database management, scheduling, job confirming, clocking in and out, but now we also take ANOTHER manual process off your hands.