Beginning with tax year 2011, the IRS requires you to exclude certain payment types you made to a 1099 vendor on Form 1099-MISC that will be included on third party payment processors such as credit card companies, PayPal etc. on forms 1099-K.
You need to file 1099 forms and have paid 1099 vendors/contractors using payment types other than cash or check, such as debit card, credit card or third party networking companies, like PayPal.
If you paid your 1099 recipients with only cash or check this legislation does not apply to you.
If you have made payments to vendors you will only need to report certain types of transactions and exclude others. Intuit is aware of these compliance changes and working on solutions for our customers.
What is a form 1099-K?
A form that is now required for third party payment processing companies, credit card processors, PayPal, etc. to report payments that have been processed to vendors and contractors.
Note: Small Business owners do not file a 1099-K form.
How do I exclude non-reportable payments so my 1099-MISC is correct?
I use QuickBooks MAC. How do I exclude non-reportable payments so my 1099-MISC is correct?
For more information on the 1099-MISC changes in QuickBooks for Mac, please visit Little Square
Third-party settlement organizations
Third-party settlement organizations, for example Paypal, only needs to issue a 1099-K to an individual if they have received more than $20K from Paypal. The $20K paid to that individual can come from many companies/individuals and because of this, there is no way for QuickBooks Desktop to know whether a Vendor would have reached the PayPayl $20K threshold and therefore there's also no way to know whether to include/exclude PayPal payments from the Vendors 1099-Misc from. Our compliance experts have advised us to exclude all Third-party settlement transactions to help our customers be compliant on their 1099-MISC form.
Additional information on the new IRS requirements are available at IRS Third Party Information Center
The IRS website has the information for the following: Form 1099-K
Please continue to check back for additional information and updates.