12/27/2023 0 Comments Paypal ppp loan first draw(**) There’s a lot of confusion over Venmo and PayPal, because there are personal-use “Friends & Family” versions as well as business versions of both platforms. (Law firms and attorneys have so many specialized 1099 issues, they get their own blog post.) You must issue a 1099 to a lawyer or law firm regardless of whether they are incorporated. There’s also an exception to the incorporation rule for attorneys and law firms. The person filling out the W-9 will indicate their entity type and whether or not they are taxed as a corporation. This is one of many reasons you should collect Form W-9 from all service vendors before giving them their first check, just to be safe. Here’s an example of a W-9 showing an LLC that is taxed as an S-Corp: In this case, you would not need to send them a 1099, because in the eyes of the IRS, they are incorporated. So, keep in mind that a company can be an LLC but be taxed as a corporation. You cannot depend on the company’s name to determine corporate status, nor can you rely on the state LLC/Corp database, as it only indicates the entity type at the state level - almost any type of entity may elect corporate status with the IRS. (*) A lot of folks get confused and think the rule is if you paid an “individual,” but really the rule is a “non-corporation,” which means that partnerships and LLCs are included. Just because they have a business name doesn’t mean they’re incorporated. It is due to recipients and the IRS by January 31st (or the first business day after that, if 1/31 falls on a weekend).ģ) via check, cash, ACH, or wire transfer - but not merchant services or electronic payments (such as credit & debit cards, PayPal Business, Venmo Business ( **see below) - and starting in 2022 Zelle/QuickPay, CashApp, personal Venmo & PayPal) “NEC” stands for “non-employee compensation”. ![]() This form was new for 2020 and replaces the old Box 7 of Form 1099-MISC. Here’s a crash course for each type of form, followed by an FAQ. ![]() The most important point is that only businesses need to issue 1099s - if you paid someone for personal purposes, you are not (yet) required to send them or the IRS a Form 1099. ![]() It is true that over time, these forms have continued to change, and the rules have become more specific… but the basics remain the same. As is the case every year, we’re hearing from lots of folks confused about when to send a 1099 form or other “information returns” to someone.
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