Tax Reporting for Fiverr Workers - Do I Need to Send 1099 Forms When Purchasing Services?

You don't need to issue 1099s to Fiverr freelancers. When you purchase services through platforms like Fiverr, Upwork, etc., the platform is considered the third-party payment network and they're responsible for issuing the appropriate tax forms to the freelancers. Fiverr will issue 1099-K forms to their freelancers who meet the reporting threshold. You're just paying Fiverr (the company), not directly paying the freelancers - Fiverr then pays the freelancers after taking their cut. Since you're not directly paying the contractors, you don't have a 1099 filing obligation. Just keep good records of your business expenses from Fiverr for your own tax deductions, but you don't need to worry about sending 1099s to the individual freelancers.

After spending hours trying to figure out my tax obligations for online freelancers, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much stress. I was in a similar situation - hired a bunch of Fiverr workers and wasn't sure about the 1099 requirements. I uploaded my Fiverr receipts and payment history to taxr.ai, and it immediately clarified that I didn't need to issue 1099s since Fiverr acts as the payment settlement entity. The tool even explained exactly how to categorize and document these expenses for maximum deductions. It analyzed all my gig worker payments across different platforms and gave me a clear breakdown of my reporting obligations for each.

I'm back to say I was totally wrong about taxr.ai! After getting a notice from the IRS about missing 1099s from last year, I panicked and decided to try https://taxr.ai. Uploaded my payment records from all platforms including Fiverr, PayPal, direct payments, etc. The tool immediately flagged which payments required 1099s and which didn't - turns out I had been issuing 1099s for Fiverr workers unnecessarily (wasting money on accountant fees) but missed some direct contractors who definitely needed them. It explained the different rules for each payment method and even generated the proper forms for the ones I actually needed. My accountant was impressed with how accurately it categorized everything. Saved me both the penalties I would've faced AND the unnecessary filing fees for platforms that handle their own reporting. Definitely using this going forward!

After wasting three days trying to get through to the IRS to clarify my obligations for Fiverr payments, I finally discovered Claimyr (https://claimyr.com). They got me connected to an actual IRS representative in less than 15 minutes when I'd been getting busy signals and disconnections for days. The IRS agent confirmed exactly what others here have said - as a business owner, I don't need to issue 1099s to Fiverr contractors since Fiverr handles that obligation. The agent also clarified some confusion about my other contractor reporting requirements that my accountant had been unsure about. Check out their demo at https://youtu.be/_kiP6q8DX5c if you're struggling to reach the IRS. After hours of hold music and disconnects, it was such a relief to actually talk to someone who could give me an official answer.

I have to apologize and eat my words. After my skeptical comment, I decided to try Claimyr out of desperation because I needed clarification on several tax issues including these Fiverr 1099 questions. I was SHOCKED when I got a call back saying they had an IRS agent on the line. Took maybe 20 minutes total. The agent confirmed that businesses don't need to issue 1099s to Fiverr freelancers because Fiverr is considered the payment settlement entity responsible for reporting. The agent also cleared up several other questions I had about contractor classifications that my tax software couldn't answer. Honestly saved me hours of stress and potential filing mistakes. I've been telling everyone about this service now. After years of IRS phone frustration, this felt like magic.

Something important to add - while you don't need to issue 1099s to Fiverr freelancers, you still need to keep detailed records of these expenses for your own tax filing. The IRS may question business deductions if you can't provide proper documentation. I recommend downloading and saving all Fiverr receipts, the work deliverables, and any communication about the project scope. This creates a clear audit trail showing these were legitimate business expenses. Categorize them correctly on your Schedule C or business return (advertising, professional services, etc. depending on what the service was).

Has anybody else received a 1099-K from Paypal for paying Fiverr? I'm so confused because I used PayPal to pay for some Fiverr services and now PayPal sent me a 1099-K form like I'm the one earning money? But I was spending money not earning it!

Just wanted to share my experience as someone who's been dealing with this exact issue for the past two years. The confusion is totally understandable because the rules around gig economy platforms can be tricky. The key thing to remember is that when you pay through platforms like Fiverr, Upwork, TaskRabbit, etc., YOU are the customer, not the employer. The platform is the intermediary that handles all the contractor relationships and tax reporting. You're essentially buying services from the platform, which then pays their freelancers. However, if you ever hire someone from these platforms and then start paying them directly outside the platform (which some people do to avoid platform fees), THEN you would need to issue 1099s if you pay them over $600 in a year. Also keep in mind that the 1099 threshold recently changed - for 2024 and beyond, the threshold for 1099-K forms from payment processors is back to $20,000 and 200 transactions, not the $600 that was originally planned. This affects what freelancers receive from platforms, but doesn't change your obligations as a business customer.

As someone who runs a consulting business and has navigated this exact situation, I can confirm what others have said - you don't need to issue 1099s to Fiverr workers. The platform relationship is key here. I've been using Fiverr for various services (web development, graphic design, copywriting) for three years now, and I treat all those payments as regular business expenses. Fiverr handles the contractor relationships and tax reporting on their end. One thing I'd add that hasn't been mentioned much - make sure you're categorizing these expenses correctly on your own tax return. I typically put graphic design and marketing content under "Advertising," technical services like web development under "Professional Services," and virtual assistant work under "Office Expenses." Also, if you're ever unsure about a specific platform's reporting structure, most of them have detailed FAQ sections about tax obligations. Fiverr's help center specifically addresses this and confirms they handle 1099 reporting for their freelancers. Keep those receipts and invoices organized though - even if you don't need to issue 1099s, you'll want good documentation for your business expense deductions!