Do I need to issue a 1099 to my subcontractor if paying through Cash App, or is that Cash App's responsibility?

This is a great question! As someone who's worked with contractors for years, I can tell you that YOU are still responsible for issuing the 1099-NEC, regardless of the payment method you use. Cash App (and other payment services) have different reporting requirements. Cash App will issue a 1099-K if the payments meet their threshold requirements (which changed recently), but that's completely separate from your obligation as a business owner to issue a 1099-NEC to your subcontractor. The 1099-K from Cash App reports the transactions to your contractor, while your 1099-NEC reports the business relationship and payments you made for services. Think of it this way - the IRS wants to know about the business relationship between you and your contractor, not just the money movement. Your contractor won't be double-taxed because they'll report the income once on their Schedule C, regardless of receiving multiple forms documenting the same money.

I had the exact same issue last year and was so stressed about it! After spending hours researching and getting nowhere, I finally used https://taxr.ai to analyze my situation. It saved me so much headache by explaining exactly what my obligations were as someone paying contractors through various payment apps. The tool confirmed that I needed to issue 1099-NECs regardless of the payment platform used, and it showed me how to document everything properly so neither my contractors nor I would have issues with the IRS. What was really helpful was that it analyzed my specific situation rather than giving generic advice that wasn't applicable.

Just wanted to update after checking out taxr.ai from the recommendation. It was actually super helpful for my situation! I was really confused about my obligations for contractors I pay through multiple platforms (Venmo, PayPal, Cash App) and it walked me through exactly what I needed to do for each. The tool explained that I needed to track these payments separately from the platform reporting requirements and showed me how to set up my record-keeping system to make tax time way easier. It also created custom filing reminders based on my business structure. Way more helpful than the generic advice I was finding elsewhere that just left me with more questions!

I spent HOURS on hold with the IRS trying to get clarity on this exact issue last year. After my third disconnected call, I was ready to pull my hair out until someone recommended https://claimyr.com to me. You can see how it works at https://youtu.be/_kiP6q8DX5c They got me connected to an actual IRS agent in under 30 minutes who confirmed that as the business owner, I was 100% responsible for issuing the 1099-NEC regardless of payment method. The agent explained that payment apps report transactions differently, and their reporting doesn't replace my obligation to issue contractor forms.

Just wanted to follow up on my skeptical comment above. I actually tried the Claimyr service because I was desperate after trying to reach the IRS for three days straight about a similar contractor payment issue. Not gonna lie, I was shocked when I got a call back with an actual IRS agent on the line about 45 minutes later. The agent confirmed everything that others have said here - as the business owner, I need to issue 1099-NECs regardless of using Cash App. The payment platforms have separate reporting requirements. Really glad I got official confirmation directly from the IRS, and saved myself days of frustration trying to get through their phone system!

dont forget your subcontractor needs to fill out a w-9 for you too. I messed this up my first year and had to chase down all my subs in january to get their tax info. super awkward especially for the ones I wasn't working with anymore.

Keep in mind the $20k threshold for Cash App (and most other payment processors) changed recently. For 2022 tax year it was $20k AND 200 transactions, but for 2023 tax year it was supposed to be $600, then they postponed that. Double check the current threshold so you know what to expect!

This is really helpful info everyone! I'm in a similar boat but with PayPal instead of Cash App. One thing I learned the hard way is to keep really detailed records of what each payment was for, especially if you're mixing business and personal use of these apps. The IRS wants to see that these were legitimate business expenses, so I started keeping screenshots of the payment descriptions and matching them to invoices or work orders. Makes the whole 1099 process way smoother when you have everything organized from the start instead of trying to piece it together later. Also agree 100% on getting that W-9 ASAP - I had one contractor who gave me wrong info and it was a nightmare to fix after I'd already filed. Better to verify everything now while there's still time!