If you have 1099 vendors, the IRS has made some changes that may affect you. Starting with the tax year 2011, you don’t have to report certain types of payments to 1099 vendors. Payment service companies will report these payments instead. We know--this sounds pretty confusing. Don’t panic! We’re here to help.
So what’s changed for 1099s? Here’s the scoop in a nutshell.
Starting with tax year 2011, you will not report payments you made to vendors using these methods:
You will continue to report payments you made to your 1099 vendors using these methods:
See? Not so bad. The best part–payment networks like Visa, MasterCard, other credit cards, and PayPal will be sending your 1099 vendors a 1099-K form that shows the total money received through their network. So if you always paid your 1099 vendors with PayPal (or any of the methods in the list) you don’t have to send them 1099-MISCs this year. That means less tax work for you, and that’s always a good thing!