New Rules regarding 1099-Misc IRS Tax Forms

There is going to be a lot of confusion this year with those 1099 forms for miscellaneous payments.

The rules have changed.

The new rule says that if your customer pays you by credit card of by a third party payments system such as PayPal, you no longer need to issue a 1099.  You need to only issue a 1099 if you pay them by check or cash.

Because businesses are required to report payments made to non-employees on form 1099-MISC, and payment processors  (including PayPal) will report the proceeds of transactions paid electronically or by credit and debit cards on form 1099-K, there is some concern that the duplicate reporting of income will result.

The confusion lies in not knowing or understanding the new rule.  As a result, they (or you) may get a 1099 from the company that paid and a second one for the same amount from PayPal or the merchant account.

So if you’ve sent them out already, you need to check with your accountant to see how to reverse it.  And if you discover that your 1099-MISC includes payments other than by cash, you can request that  a corrected copy be sent to you.






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