For our clients that report payments to us on the 1099-NEC form, it is important that you review what you report this year.
All credit card payments you have made to us are reported by our credit card processor Paya to the IRS.
You should not report on your 1099-NEC any credit card payments. You should report only check, Zelle, and EFT bank transactions via BILL.com.
We have had a situation recently with the IRS for the year 2022 where clients reported on a 1099-NEC credit card payments to us and then these same payments were reported to the IRS by Paya. The IRS then received documentation of erroneously reported double income.
These problems are a hassle to resolve and we encourage any clients who will be doing a 1099-NEC for us for the year of 2024 to not include any credit card payments they have made to us as they are to reported via the 1099-K by Paya our credit card processor.
If you do report credit card income on your 2024 1099-NEC, we will ask you for a revision to prevent audit issues with the IRS for the year 2024.
Better yet, ask us before the year end to print out your 2024 customer ledger from our Accounting Software and we can show you the detail of what to report on your 1099-NEC and show which transactions will be reported by Paya on the 1099-K so double income reporting is not done to the IRS.
For more information on reporting of 1099-NEC and 1099-K we encourage you to read this article on why you should not report credit card payments on your 1099-NEC.
Read the article: Clarifications and Complexities of the New 1099-K Reporting Requirements