Do I need to send 1099 forms to subcontractors I paid through my side job?

I've got a full-time W-2 job, but last year I took on a side project remodeling a house for an old client. We did it on a cost-plus basis, and I made about $13,500 on the job. The client would mail me checks to cover payments for all the subcontractors I hired. I was basically managing the project and distributing payments. Almost all payments to the subs (like 95%) were done by check that I wrote from the money the client sent me. Now I'm trying to figure out my tax situation - do I need to send 1099 forms to all these subcontractors? I've never had to deal with this before since my regular job just gives me a W-2. Also wondering if there's a minimum payment threshold before I need to send a 1099? Some subs only did small jobs worth a few hundred bucks. I'm not a registered business or anything, just did this as a one-off project. Any advice would be super helpful before tax season gets too crazy.

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20 comments

Aisha Abdullah

•8M

Yes, you likely need to send 1099-NEC forms to those subcontractors. Since you were operating as a self-employed individual on this project (even though you have a W-2 job), you generally need to issue 1099-NECs to any unincorporated service provider you paid $600 or more during the tax year. The fact that your client sent you money that you then used to pay subcontractors doesn't change your responsibility. From the IRS perspective, you were contracting these subs, not your client. You'll also need to report the full amount you received (including what you paid to subs) on your Schedule C, then deduct the subcontractor payments as business expenses.

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Aisha Abdullah

•8M

You can get 1099-NEC forms from office supply stores, order them from the IRS, or use tax software that supports form generation. For electronic filing, you'll need to register with the IRS for a Transmitter Control Code which takes some time, so don't delay. Yes, you absolutely need their Tax ID numbers (either SSN or EIN) to properly complete the 1099s. You should have collected W-9 forms from each contractor before paying them. Without their tax IDs, you might be required to withhold backup withholding at 24%. I'd recommend contacting them ASAP to get their information - most legitimate contractors will provide this without issue.

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Yuki Tanaka

•8M

I was in almost the exact same situation last year! I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out all my 1099 responsibilities. I was completely lost trying to determine who needed 1099s and who didn't, plus I was worried about getting hit with penalties for doing it wrong. The tool analyzed my situation and clearly explained which contractors needed 1099s (over $600 to unincorporated businesses) and which didn't (corporations are generally exempt). It also helped me understand the filing deadlines - you need to get those 1099s to contractors by January 31 and to the IRS shortly after. Saved me from a ton of stress!

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Yuki Tanaka

•8M

It absolutely helps with electronic filing! The platform walks you through the e-filing process step by step and handles the transmission to the IRS. You don't need to figure out the TCC (Transmitter Control Code) process yourself - they take care of that complexity. For contractors with missing information, the tool provides templates and guidance for reaching out to get their details. It also explains backup withholding requirements when you can't get someone's TIN. The system even has a feature that flags potential issues based on payment types and amounts, so you know exactly where your risks are.

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MidnightRider

•8M

So I tried taxr.ai after being super skeptical, and I'm actually impressed. I was in a similar situation with side contracting work and missing information from some subs. The system flagged exactly which contractors I needed to collect W-9s from and which ones were exempt from 1099 requirements (like the hardware store that's a corporation). What really helped was the explanation of how to handle the money flow on my Schedule C - I needed to report ALL the money coming in and then deduct the subcontractor payments separately. Without that guidance I probably would have just reported my profit and gotten flagged for audit. They also have this document analyzer that confirmed my understanding of some confusing IRS instructions.

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Andre Laurent

•8M

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Jamal Washington

•8M

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Mei Wong

•8M

It doesn't matter that you were "passing money along" - you were the one cutting the checks to the contractors, so in the eyes of the IRS, you're the one who hired them. The IRS looks at who actually paid the contractors, not where the money originated. I recommend documenting everything carefully. On your Schedule C, you'll report all the money your client paid you (including the amounts for contractors) as your gross income, then deduct the payments to contractors as business expenses. This way everything balances out properly. Don't make the mistake of only reporting your fee as income - that's a red flag for audits.

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Aisha Abdullah

•8M

Great question! If the client wrote checks DIRECTLY to the subcontractors (with the subs' names as payees), then the client would be responsible for filing the 1099s, not you. The key is whose name is writing the payment to whom. In your case, since the client wrote checks directly to the subs, you were just the messenger. You don't need to issue 1099s for those payments. But for the original poster, since they received money from the client and then wrote their own checks to the subs, they're considered the payer and need to issue the 1099s.

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Dylan Wright

•2M

Just want to emphasize one important detail that might save you headaches - make sure you get W-9 forms from ALL your subcontractors before you pay them, not after. I made the mistake of trying to collect tax info after the job was done and some contractors had already moved on to other cities or changed phone numbers. Also, keep detailed records of everything - copies of all checks you wrote, the amounts, dates, and what work each contractor did. If you get audited, the IRS will want to see the paper trail showing these were legitimate business expenses. Since you're reporting this on Schedule C, having good documentation will help justify the deductions and show you weren't just trying to hide income. One more tip: if any of your contractors were incorporated businesses (like "ABC Roofing LLC"), you generally don't need to send them 1099s. But you still need to report the expenses on your Schedule C.

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Miles Hammonds

•2M

This is really solid advice about getting W-9s upfront! I learned this lesson the hard way on a smaller project last year. One contractor I paid $800 to just disappeared after the job - no working phone number, nothing. I ended up having to do backup withholding documentation and it was a nightmare. The incorporated business tip is huge too. I almost sent a 1099 to a roofing company that was clearly an LLC, which would have been unnecessary paperwork. Quick question though - how do you usually verify if a contractor is incorporated? Do you just ask them or is there a way to look it up?

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