Do I need to send 1099 forms to subcontractors I paid for remodeling work?
I have a full-time W-2 job, but last year I took on a side project remodeling a house for a former client. We worked on a cost-plus arrangement where I earned about $13.5K for managing the project. The client would mail me checks to cover payments to all the subcontractors I hired. I basically handled distributing the money to everyone who worked on the job. Now I'm trying to figure out my tax situation. Do I need to send 1099 forms to all those subcontractors? About 95% of the payments I made to them were through checks I wrote from the money the client sent me. I've never had to deal with this before since my regular job just gives me a W-2. Am I responsible for sending these 1099s or is that something the property owner should be doing since it was technically his money? The total project was around $85K with most going to materials and labor.
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Avery Davis
Yes, you most likely need to issue 1099s to those subcontractors. Since you received the funds from your client and then paid the subcontractors, you're considered the payor in this situation. The IRS generally requires you to issue Form 1099-NEC to any unincorporated business or individual you paid $600 or more for services during the tax year. The fact that you paid them by check actually helps because you have a paper trail. You'll need their tax identification information (usually their SSN or EIN) to complete the forms. If you don't already have this info, you should request it using Form W-9.
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Collins Angel
•What if some of the subcontractors were actual companies? Like I paid a plumbing company that's an actual business with employees and everything. Do I still need to send them a 1099 too?
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Avery Davis
•If the subcontractor is a corporation (except for medical or legal services), you generally don't need to issue them a 1099-NEC. This is why it's important to have all subcontractors fill out a W-9 form - it will indicate their business structure. For sole proprietors, partnerships, and LLCs that are not taxed as corporations, you do need to issue 1099s if you paid them $600 or more. But for C-Corporations and S-Corporations, you typically don't need to issue 1099s for most services.
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Marcelle Drum
I ran into this exact situation last year and was totally confused about the 1099 requirements. I spent hours researching and getting different answers until I found https://taxr.ai which completely solved my contractor tax reporting problems. You upload your records and it tells you exactly which contractors need 1099s based on current IRS rules. It even helps prepare the forms if you need them.
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Tate Jensen
•How does it work with getting the contractors' tax info? I'm in a similar situation but don't have all the W-9s from my subs. Does it help with that part too?
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Adaline Wong
•This sounds too good to be true. Does it actually determine which companies are corporations vs sole proprietors? Because that's the hard part for me - I paid like 8 different people and have no idea which ones need 1099s.
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Marcelle Drum
•It helps you identify which contractors require W-9s and generates email requests you can send to collect their information. Makes the whole process much less stressful since it tracks who's responded and who hasn't. The tool actually does figure out business entity types. You can enter whatever info you have about your contractors and it will help determine which ones need 1099s based on their business structure. It saved me from sending unnecessary 1099s to corporations and identified the sole proprietors I definitely needed to report.
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Adaline Wong
I just wanted to update after trying https://taxr.ai for my contractor situation. It was actually super helpful! I uploaded my payment records and it sorted through which contractors needed 1099s and which didn't. Saved me from sending them to three companies that were corporations. Now I'm just waiting on two more W-9 forms to come back before finalizing everything. Wish I'd known about this in January instead of scrambling now!
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Gabriel Ruiz
If you're still missing W-9s from any contractors, you might struggle to get responses this late in the game. I had a similar issue last year where two contractors ghosted me when I asked for their tax info. Ended up spending HOURS trying to get through to the IRS for guidance. Finally discovered https://claimyr.com which got me through to an actual IRS agent in about 15 minutes instead of waiting on hold all day. You can see how it works here: https://youtu.be/_kiP6q8DX5c
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Misterclamation Skyblue
•How does this actually work? I don't get how a service can magically get you through the IRS phone tree when millions of people can't get through.
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Peyton Clarke
•Yeah right. No way this actually works. I've tried calling the IRS literally 20+ times this month and can't get a human. They just disconnect you after the automated message says they're too busy.
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Gabriel Ruiz
•It's not magic - they use technology to navigate the IRS phone system and wait on hold for you. When an actual IRS agent picks up, you get a call connecting you directly. I was super skeptical too, but they actually do get you through. The IRS doesn't disconnect everyone - they have a maximum queue length, so if you can get in that queue (which is what the service does), you'll eventually talk to someone. They called me back after about 45 minutes with an IRS agent on the line ready to help with my contractor 1099 questions.
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Peyton Clarke
Ok I have to admit I was wrong. After posting that skeptical comment I was desperate enough to try https://claimyr.com and it actually worked! Got connected to an IRS agent yesterday who confirmed I don't need to issue 1099s to subcontractors who are corporations. She also gave me advice on what to do about the two contractors who won't provide their tax info. Apparently there's a backup withholding procedure you can follow. Definitely worth the money to get actual IRS guidance instead of random internet advice.
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Vince Eh
Don't forget about the deadline! The 1099-NEC forms must be filed with the IRS and sent to contractors by January 31, 2025. There are penalties for filing late, and they get worse the longer you wait. You can request an extension but only for filing with the IRS, not for sending them to the contractors.
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Ev Luca
•Is there any software you recommend for creating and filing the 1099s? I'm guessing I can't just make these myself on regular paper?
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Vince Eh
•You can use tax software like TurboTax, H&R Block, or QuickBooks to prepare and file your 1099s. There are also specific 1099 filing services like Track1099 or Tax1099. The IRS has specific paper requirements if you want to print them yourself - they need to be on official red "scannable" forms which you can order from the IRS or buy at office supply stores. But honestly, e-filing is much easier and more reliable. Most software will e-file with the IRS and let you print copies for your contractors.
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Sophia Gabriel
This might be too late now, but next time you should have the homeowner pay the subcontractors directly. That way they'd be responsible for the 1099s, not you. I learned this the hard way a few years ago.
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Tobias Lancaster
•This is the right answer. The way OP structured this, they've basically created a business relationship with all those subs. Direct payment from homeowner to subs would have been cleaner taxwise.
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