Most 1099 guidance answers two questions: who gets a form, and by when.

There is a third that decides more of your filing list than either: how you paid them.

A vendor you paid $9,000 by company card and a vendor you paid $9,000 by check can be treated differently. If the payment is otherwise reportable, the check payment may belong on your 1099-NEC filing while the card payment does not.

The Card Exception

The IRS instructions are direct about this. Payments made with a credit card or payment card, and certain other payments including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W, and are not subject to reporting on Form 1099-NEC or Form 1099-MISC.

Read what that means for your process.

• Someone else has the reporting obligation. The card company or payment platform reports under a separate provision.

• Filing it anyway can create duplicate reporting. If the payment is also reported to the vendor on Form 1099-K, the vendor or their accountant then has to reconcile two information returns covering the same payment, and they will usually come to you to do it.

• It is not optional. This is not a choice between two acceptable treatments. The instructions say those payments are not subject to reporting on the NEC.

The exception covers credit and payment cards, and qualifying third-party network transactions. Some payment platforms fall into this category when they meet the IRS definition of a third-party settlement organisation.

What It Does Not Cover

The distinction is about the payment mechanism, and several things that feel similar fall outside it.

• Check, ACH and bank transfer. An ordinary bank transfer you initiate is not a third-party network transaction. These remain subject to the normal 1099 rules if the payment is otherwise reportable.

• Cash. Cash payments remain subject to the normal 1099 rules if the payment is otherwise reportable.

• In-house payables. The IRS instructions for Form 1099-K note that in-house accounts payable departments and automated clearing houses do not qualify as third-party settlement organisations for this purpose. Paying a vendor through your own AP process, even electronically, is not the same as paying them through a platform that settles on their behalf.

Two practical implications.

1. The split runs down the middle of your vendor list. A plumber paid by card in March and by check in September has one reportable payment and one that is not.

2. Your payment method mix determines the size of your filing. An operator paying most vendors by card has a materially shorter list than one paying by check, for identical spending.

Working Out Which Is Which

This is a records question rather than a tax question, and it is answerable in November rather than January.

• Payment method has to be a field. If you cannot filter a payment report by method, you cannot produce a filing list. This is the single dependency the whole exercise rests on.

• Run totals by payee and by method. Not just by payee.

• Apply the threshold to the payments that remain reportable after the payment-method split. The current threshold and how it applies is worth confirming against the year you are filing for.

• Watch the mixed vendors. These are where errors happen: a vendor paid several ways across the year, where someone runs the gross total and files on it.

• Check what your processor is reporting. If you use a platform to pay vendors, establish whether it is reporting those payments and to whom.

This sits naturally in the November work of the year-end calendar, alongside the W-9 audit and the payment totals.

The Other Exclusions Worth Knowing

The payment method exception is one worth checking carefully. Four others are worth checking against your list.

1. Corporations, with exceptions. Payments to corporations are generally excluded from 1099-NEC reporting, but the exclusion does not apply to payments for legal services. Attorney fees are reportable even where the attorney is incorporated. An LLC is not automatically treated as a corporation for this purpose. Its federal tax classification and the type of payment determine whether the corporation exception applies, and the detail on that distinction is worth reading before filing.

2. Payments for merchandise alone. Payments for merchandise are generally not reported on Form 1099-NEC. But parts and materials supplied as part of a service can be included in nonemployee compensation, so the distinction is between a purchase of goods and a service that happens to include materials. Most maintenance invoices are the second kind.

3. Combined invoices. Where a single invoice covers different categories, the instructions direct proration in some cases. Their example is a machine rental with an operator: the machine rent goes on the MISC and the operator's charge on the NEC. Equipment hire with an operator is common enough in property maintenance to be worth recognising.

4. Employees. Wages go on a W-2, not a 1099. Worth stating because worker classification errors surface as 1099 filings for people who should have been on payroll, and that is a larger problem than a reporting one.

Where This Goes Wrong

Four recurring versions.

• Filing on gross totals. Payment totals run per payee without a method split, and card payments are included in a filing that should have excluded them.

• Assuming all electronic payments are covered. ACH and bank transfers you initiate are not third-party network transactions. Treating "paid electronically" as equivalent to "paid by card" removes payments from your list that belong on it.

• Filing anyway, to be safe. Duplicate reporting is not a cautious choice. Where the payment is also reported on a 1099-K, it creates a discrepancy on the vendor's side that someone has to resolve.

• Not knowing the payment method at all. Where the record shows an amount and a date but not how it was paid, the filing list cannot be produced correctly and somebody ends up guessing.

That last one is worth fixing at source rather than at year end. Where vendor payments and their method sit on the same record as the invoice and the work order, the filing list is a filtered report.

Frequently Asked Questions

1. Do you issue a 1099 for payments made by credit card?
No. The IRS instructions state that payments made with a credit card or payment card, and certain other payments including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity and are not subject to reporting on Form 1099-NEC or Form 1099-MISC.

2. What about payments made by ACH or bank transfer?
An ordinary bank transfer you initiate is not a third-party network transaction and remains subject to the normal rules if the payment is otherwise reportable. The instructions for Form 1099-K note that in-house accounts payable departments and automated clearing houses do not qualify as third-party settlement organisations.

3. What happens if you file a 1099-NEC for a card payment?
Where the payment is also reported to the vendor on Form 1099-K, the vendor holds two information returns covering the same payment. Reconciling that generally falls to the vendor or their accountant, and they will usually come back to you about it.

4. How does the threshold work when a vendor was paid several ways?
The reportable payments are what count. A vendor paid partly by card and partly by check has a reportable total consisting of the non-card payments, and it is that figure that is measured against the threshold rather than everything paid.

5. Are payments for materials reportable on a 1099-NEC?
Payments for merchandise alone are generally not reported on the NEC, but parts and materials supplied as part of a service can be included in nonemployee compensation. The distinction is between buying goods and buying a service that includes materials, which covers most maintenance invoices.

6. Are payments to a corporation reportable?
Generally excluded, with exceptions. Payments for legal services are reportable even where the attorney is incorporated. An LLC is not automatically treated as a corporation for this purpose, and its federal tax classification together with the type of payment determines whether the exception applies.

Three Questions, Not Two

Who, when, and how you paid them.

The third one is the least discussed. For operators that pay vendors by card, payment method can remove otherwise qualifying payments from the 1099-NEC filing list, and it is easy to get wrong in the direction that looks cautious, because filing something you should not have filed feels safer than omitting something you should have.

It is not safer. Where the payment is also reported on a 1099-K, the same payment may appear on two information returns, and the person untangling it is the vendor you were trying to be careful with.

Confirm the treatment against the current IRS instructions for the year you are filing, since forms, thresholds and reporting rules change.

RIOO is a property management platform built on NetSuite, with leasing and property accounting in the same underlying system.

Note: Guidance in this article is general and does not constitute tax advice. Reporting rules, thresholds, forms and the treatment of particular payment types change and depend on your circumstances. Confirm the position against current IRS instructions and with your accountant before filing.