Explore the 1,000’s of tax questions answered by professionals.

Back to list


Related User


I have a client that pays several independent contractors through Paypal. For several of these contractors, the payments exceeded the $600 1099-MISC Form reporting requirement. The total payments though are $20,000 or less and thus would not require Paypal to issue a 1099-K Form. Which 1099 Forms should be filed with the IRS?


The BIDaWIZ Team's Answer:

This is a great 1099 tax question.
The short answer is that you do not need to issue a 1099-MISC Form when the payments are made with a processor that normally reports the amounts via Form 1099-K. As is always the case, whether or not a 1099 is actually issued, the taxpayer is still required to report their income. This answer merely covers which information 1099 form should be issued.
Specifically, payments remitted using Paypal (or any other processor) would generally be reported on Form 1099-K by the processor and thus those amounts do not need to be included on the 1099-MISC by the employer. There's a caveat though. The 1099-K Form does not need to be issued by the processor if there were $20,000 or fewer in total transactions and 200 or fewer transactions. Thus, there could be an instance in which the 1099-K and 1099-MISC both would not be issued. We understand that it may create a large 1099 information tax form reporting loophole, but that is the guidance per the IRS Instructions on Form 1099-K and Internal Revenue Code Sections 6041, 6041A, and 6050W. This may change in the future, but that is where we stand as of October, 2014.
References: Internal Revenue Code Sections 6041, 6041A, and 6050W

The BIDaWIZ Team



  • Currently 4.6190/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
1547 Ans.