How do issue a 1099 to a contractor that I paid via Zelle transaction?

Welcome to the Community, @Fred.

Let me share some information about how you issue a 1099 to a contractor that you paid via Zelle transaction in QuickBooks Online.

Payments to 1099 vendors made via credit card, debit card, or third-party system, such as PayPal, are excluded from the 1099-MISC and 1099-NEC calculations. This is because the financial institution reports these payments, so you don't have to.

Certain payments made to contractors must be reported on the 1099-K form instead of the 1099-MISC or 1099-NEC forms. This includes payments made through third-party processors like Venmo and credit card companies. I suggest contacting Zelle to verify if they can provide a 1099 K.

If you have any questions regarding payments that are processed by a third party and are excluded from 1099-NEC and 1099-MISC, you can either visit the IRS website or contact them directly to seek assistance. To gain more insights on the payments that are excluded, you can refer to the article that covers the same topic.

If you would like to learn more about how to manage 1099s in QuickBooks Online, check out these articles:

• Create and file 1099s using QuickBooks Online
• Modify your chart of accounts for your 1099-MISC and 1099-NEC filing⁠⁠⁠⁠⁠⁠⁠

Feel free to reach out with any questions you may have about 1099 or QuickBooks. We're always here to help you out. Have a great day ahead!

I also have this issue. According to Zellepay.com, they do not file a 1099-K because they aren't a 3rd party settlement company like PayPal. A business that paid a contractor more than $600 for services through Zelle is required to issue a 1099 NEC. 

Right now my Zelle Contractor payments are saying Non-Reportable payments, even though the Tax Form Section of that QB Account is Payroll and the Contractor is Active. 

How can this be enabled in Quickbooks Online?

I have the same issue.  According to Zellepay.com, they aren't required to file 1099-K because they aren't a payment settlement company like PayPal.  We pay a contractor more than $600 via Zelle and research suggests we should file the 1099 since payment for service was greater than $600. Right now payments made to this contractor are showing up as Not Reportable, even though the Tax Line for the QB account is Payroll and the contractor is active.

How can these be made to show up as reportable payments?

Thanks!

Thanks for reaching out in the Community for assistance, @noonancountsnumbers. I’ve got some information on how you can manage these payments so you can issue 1099s.

In QuickBooks Online, payments to contractors made via credit card, debit card, or third-party system, such as PayPal, are excluded from the 1099-MISC and 1099-NEC calculations. See this guide to learn more: Understand which payments don't count from a 1099-NEC and 1099-MISC form.

In your case, it’s best to contact the IRS first or a tax professional to verify if you need to include the amount as one of the reportable payments. They can confirm and provide enough information about this matter to ensure compliance.

If there’s a need to, you’ll want to change the payment method of each transaction in QuickBooks. I’m glad to show you the steps:

1. Select the Gear icon at the top right of the page.
2. Go to your Chart of accounts.
3. Locate the account, then click View register.
4. Find each entry and select to open it.
5. Update the payment method and save it afterward.

Here are some resources you can read to know who you need to file 1099s for and how to prepare and file them within the program:

• IRS guidelines for 1099
• Create and file 1099s with QuickBooks Online

Never hesitate to visit this thread again if you have any other concerns or questions about tax forms. We’ll be here to find solutions for you, @noonancountsnumbers.

Thank you for posting this reply. I actually had already followed the instructions from this post to the change the expense Payment Method from Blank field to Cash. (This was a bank to bank transfer not a credit card payment).

I have three (3) transactions two were originally Zelle and one by Check (amount over $600) -- I still cannot see the updated transactions nor the check payment in the 1099 Reportable Payments. They still appear in the Non-reportable payments. Can anyone tell me how I can get the transactions to show in the right area? Has anyone had success? Thank you.

Thank you for posting this reply. I have already followed the instructions from this post to the change the expense Payment Method from a blank field to Cash. (This was a bank to bank transfer not a credit card payment).

I have three (3) transactions two were originally Zelle and one by Check (amount over $600) -- I still cannot see the updated transactions nor the check payment in the 1099 Reportable Payments. They still appear in the Non-reportable payments. Can anyone tell me how I can get the transactions to show in the right area so I can process the 1099? Has anyone had success? Thank you.

I appreciate the efforts you've made to resolve this concern, cll4. 

Let me share some details about why you're unable to view the 1099 in your Reportable Payments. It is important to ensure that the box you have selected is correct and aligned with the form you are creating, as Form 1099-NEC and 1099-MISC are different forms. Additionally, it's important to note that these forms must be properly checked in their respective boxes. If you would like to learn more about each box, I can share with you a list of each box from each form.

1099-NEC

• Nonemployee compensation (Box 1)
• Payer Made Direct Sales Totaling $5,000 or More (Box 2)
• Federal tax withheld (Box 4)
• State Information (Boxes 5-7)

1099-MISC

• Rents (Box 1)
• Royalties (Box 2)
• Other Income (Box 3)
• Federal tax withheld (Box 4)
• Fishing Boat Proceeds (Box 5)
• Medical and Health Care Payments (Box 6)
• Payer Made Direct Sales Totaling $5,000 or More (Box 7)
• Substitute Payments in Lieu of Dividends or Interest (Box
• Crop Insurance Proceeds (Box 9)
• Gross Proceeds Paid to an Attorney (Box 10)
• Fish Purchased for Resale (Box 11)
• Section 409A Deferrals (Box 12)
• FATCA Filing Requirement Checkbox (Box 13)
• Excess Golden Parachute Payments (Box 14)
• Nonqualified Deferred Compensation (Box 15)
• State Information (Boxes 16-18)

Moreover, to ensure that the payments aren't excluded, you'll need to see if the check number field doesn't have the following terms: Debit, Debitcard, DBT, DBT card, DCard, Debit cd, Visa, Masterc, MC, MCard, Chase, Discover, Diners, Paypal, and Zelle

Additionally, verify that you're paying them from the right expense account. When creating 1099s, the program uses the expense accounts you mapped to report 1099 transactions. Please refer to the Step 3 section of this article for more info: Troubleshoot missing contractors or wrong amounts on 1099s.

For reference, you can check out these article: 

• Understand which payments are excluded from a 1099-NEC and 1099-MISC.
• Understand payment categories for the 1099-MISC and 1099-NEC.

In addition, if you've done checking everything and the issue persists, I suggest contacting our support team. They have the necessary tools and expertise that are essential in helping you resolve this concern. 

You can also check out this article that can help you personalizing your payroll reports: Run payroll reports.

Please don't hesitate to get back to us if you have further concerns about 1099. The Community space is always available to assist you.