Did you make any payments in 2018 that would require you to file Form(s) 1099?
You must answer this question on your tax return — or we will on your behalf — “Did you make any payments in 2018 that would require you to file Form(s) 1099?”
How do you know if you made payments that require a 1099 to be sent?
Well, if you paid someone with check, personal PayPal, Venmo, or cash, you may need to.
This includes contractors you paid more than $600 in 2018.
Check your books!
There should be an independent contractor expense account that you can see all your payments. If you’re using Xero, they have a 1099 report that will automatically pull everything for you. You’ll still want to confirm the totals are correct and you don’t have payments categorized differently or paid with a credit card for part of the year.
Better news yet—if you paid all your contractors through Gusto—they’ll take care of all the 1099s for you. You’ll want to be sure you didn’t miss any historic payments if you paid a contractor outside of Gusto. You can add those manually.
You should also request a new W9 from your contractors each year in case they’ve moved or changed names. This should be one of the first steps you take when working with any new contractor.
You can file the actual 1099s electronically—or have them mailed on your behalf—through track1099.com or tax1099.com. Xero exports to these softwares.
Generally, you shouldn’t include reimbursements in box 7 of a 1099. If you do, the contractor will just need to deduct those expenses. If you don’t then they won’t report the income or the expense from the reimbursed amounts. These amounts are not reported on the 1099.
Don’t send 1099s to corporations. And don’t include payments that were made through credit card or business PayPal accounts. Those services are required to report payments over a different threshold via a 1099-K.
It’s important to file these forms by January 31st to avoid penalties and help everyone complete their tax filings sooner. If you didn’t receive a 1099 from someone else, you still need to report the income.