Do I still send 1099s if I pay contractors through PayPal or a card?
If you pay contractors through PayPal, Venmo, or a credit or debit card, the payment processor reports those payments to the IRS on a 1099-K. You do not issue a 1099-NEC for the same payments because that would create double-reporting.
The 1099-NEC is for direct payments you make to contractors. That means cash, paper check, or ACH bank transfer. If you paid a contractor $600 or more in a year using those methods, you need to send them a 1099-NEC by January 31.
The logic is straightforward. The IRS wants to know about payments made to contractors so they can verify the contractor reports that income. But they do not want the same payment reported twice. Payment processors like PayPal, Stripe, Square, and Venmo handle the 1099-K reporting for payments that run through their platforms. You handle the 1099-NEC reporting for payments that go directly from your bank account or cash drawer to the contractor.
If you pay the same contractor through multiple methods, you only report the direct payment portion on a 1099-NEC. Say you paid a freelance designer $2,000 through Venmo and another $1,500 by check. You would issue a 1099-NEC for the $1,500 check payment. Venmo handles reporting the $2,000.
The practical challenge is tracking which payments went through which method. If you run everything through one business checking account and one credit card, and your books are up to date, this is easy to pull at year end. If payments are scattered across personal accounts, various apps, and cash, reconstructing who was paid how becomes a project. This is where clean small business bookkeeping throughout the year pays off. When every contractor payment is categorized correctly, pulling your 1099 list in January is straightforward.
Our 1099 preparation service handles the full process. We identify which contractors need a 1099-NEC, gather their W-9 information, and file the forms by the deadline. We keep the lines straight so you do not double-report payments that the processor already covers.
If you have questions about your specific situation or need help sorting out a year’s worth of contractor payments, reach out for a consultation. Simona is a CPA and Enrolled Agent who can walk through the details with you.
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