New 1099 Regs – Online Bill Pay is still reported on a 1099-MISC
January 27, 2012
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I got off the phone with the IRS and have an answer: online bill pay is still 1099-MISC, not 1099-K. This is very good news as it uncomplicates things a bit if you have paid contractors partially with regular checks and partially with online bill pay..
The IRS, in their inimitable wisdom and desire to make sure that every penny of income is accounted for, has decided to instate new rules regarding payment for contract labor with a credit card, ATM card or PayPal. If the business paid any contractor eligible to receive a 1099, $600 or more by these means, it is the responsibility of the bank (this includes Paypal) to send the new 1099-K form, rather than the business having to send the standard 1099-Misc.
QuickBooks 2012 for PC and Mac have facilities to deal with this differentiation, so if you’ve been thinking of upgrading, now would be the time.
For more information on the new regulations and how they impact your business click here.
Update: Different institutions seem to have differing opinions about this. If you have any doubts, it might be wise to send a note with the 1099s asking the recipients to check the amounts asap, and let you know if they receive a duplicating 1099-K.