1. How did you pay the vendor?
A. Credit card, debit card, PayPal, or similar third-party payment platform
No 1099 needed from you, since the payment processor handles reporting via Form 1099-K (assuming they meet reporting thresholds). You can stop here.
B. Cash, check, direct bank transfer, or other direct payment method
Continue to Question 2Â to see if you need to file 1099-NEC or 1099-MISC.
2. Did you pay $600 or more in total to this person or business during the year?
A. Yes → Go to Question 3.
B. No → No 1099 is required (no further questions needed).
3. What type of entity is the payee?
A. An individual, sole proprietorship, or LLC taxed as sole prop/partnership → Go to Question 4.
B. A partnership (non-LLC) → Go to Question 4.
C. A corporation (C-Corp or S-Corp) → Typically no 1099 is required unless the payment is for attorney fees or certain medical/healthcare payments. Check for exceptions; if none apply, you’re done.
D. Unknown → Request or review their Form W-9 to confirm. Then resume the quiz.
(Note: If the payee is your employee, they get a W-2, not a 1099.)
4. What did you pay them for?
Services (nonemployee compensation—e.g., consulting, freelance, repairs)
Go to Question 5.
Rent (e.g., office rent, equipment, land)
That’s reported on Form 1099-MISC (Box 1) if the payee is not a corporation. If the landlord is a C-Corp or S-Corp, no 1099 needed (generally).
Royalties of $10 or more
That’s Form 1099-MISC (Box 2).
Prizes, awards, or other taxable income (non-wage)
That’s Form 1099-MISC (Box 3) if $600 or more.
Attorney fees or legal settlements
Attorney fees (for services rendered): Form 1099-NEC.
Gross proceeds paid to attorneys (e.g., settlement funds): Form 1099-MISC (Box 10).
None of these or unsure → Check IRS instructions or consult a tax pro.
5. For services ($600 or more) to a non-corporate payee…
You generally file Form 1099-NECÂ (Nonemployee Compensation).
(Example: An LLC taxed as a partnership performing plumbing, consulting, or graphic design services.)
Summary of Outcomes
No 1099 if Paid by Credit/Debit Card or Third-Party Processor
Those entities issue Form 1099-K if thresholds are met.
No 1099 if Under $600
Payments under $600 total for the year are not reportable.
Form 1099-NEC
$600 or more
Paid for services
To an individual, sole prop, or partnership/LLC taxed as such
Not your employee
Form 1099-MISC
Rent of $600 or more (Box 1)
Royalties of $10 or more (Box 2)
Other income (prizes, awards, etc.) of $600 or more (Box 3)
Attorney gross proceeds (Box 10)
Payment not made by credit/debit card (otherwise 1099-K)
Check the Payee’s Entity Type
If they’re a C-Corp or S-Corp, you generally do not file 1099, except for certain payments (legal, medical).
Final Notes
Always obtain a W-9Â from vendors so you know their business structure and TIN.
Deadlines: 1099-NEC must be filed by January 31; 1099-MISC typically due to recipients by January 31Â and to the IRS by February 28Â (paper) or March 31Â (e-file), unless you reported NEC (which now belongs on 1099-NEC).
Keep Good Records of each vendor’s payment method to avoid double-reporting or missing a 1099 entirely. If in doubt, consult the IRS instructions or a tax professional for clarity.
If you have any questions or need personalized help, don’t hesitate to reach out. Schedule a call with Jacob by going to https://www.jacobcurtiscpa.com/7-shopify-mistakes-calendar. We're here to help you piece together financial freedom.