Recording a Vendor Payment Made by Credit Card

The IRS requires a 1099-NEC or 1099-MISC when you have paid a vendor or contractor over $600 in a given calendar year.

But, there is an exception to this rule: 

You’re not required to send a 1099 form to contractors or vendors if you paid them via a credit card. In these cases, the filing requirement is not on you but on the payment processor (for example, your credit card company), which is the origin of the payment.

Per the IRS, “Payments made with a credit card or payment card and certain other types of 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-MISC.”

In Patriot’s Accounting Software, when you are recording a past payment for a vendor or contractor by credit card, the 1099 type will change automatically to “Non-1099 payment.” These payments will not be included on any 1099s or 1096s you create in Patriot at year-end.

Also, keep in mind your totals on your Vendor Payment History report may not match your 1099 exactly if you’ve recorded credit card payments to vendors or contractors.

For other types of 1099 payments, check out our help article, “Which 1099 type do I choose?”