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Form 1099-NEC Decision Tree

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*If Personal Venmo or PayPal Friends and Family is used for business purposes, form 1099-NEC should be issued. However, best practice is to use only business accounts for business transactions. Use of personal accounts for business transactions may violate the terms of the payment service.

**Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-NEC or 1099-MISC.

 

***The exemption from reporting payments made to corporations does not apply to payments for legal services. Therefore, Attorney’s Fees, even to corporations that provide legal services, are reported on a 1099-NEC, while Gross Proceeds to an attorney (i.e. settlement proceeds) are reported on 1099-MISC.

~Rents are still reportable on 1099-MISC with the exception of payments of rent to real estate agents or property managers. (The real estate agent or property manager must use Form 1099-MISC to report the rent paid over to the property owner.)

Disclaimer: The information contained within this document is provided for reference and informational purposes only. Presentation of this information does not create a client-business relationship nor does it constitute professional bookkeeping, accounting, tax, or legal advice.

 

Visit www.irs.gov/forms-pubs/about-form-1099-nec to learn more.

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