1099 or not

[Patrick Michael]

New client owns a hair salon and rents three chairs to other stylists.  The stylists who rent the chairs run their credit card transactions through the clients machine and he then writes checks to the stylists for their share, less the fees.  The 1099-K will show the total amount run through the machine so he will have to show that as income and then back out the amount given to the stylist.  I'm thinking he should send 1099's to the stylists as other income.  Any thoughts? 

[ILLMAS]

If reported as other income, other preparers  are going to save their client taxes by reporting it on line 21, even dough technically they are not contracted by the owner of the CC machine, box 7 would be more accurate.

[Abby Normal]

He should send them a 1099K.

[Lee B]

The simple solution is for each stylist to get a Square account.

[ILLMAS]

18 minutes ago, Abby Normal said:

He should send them a 1099K.

 

Do you know if non financial companies can issue 1099k?

[Abby Normal]

Aggregated payees.

If you receive payments from a PSE on behalf of one or more participating payees and you distribute such payments to one or more participating payees, you are:

• The participating payee with respect to the PSE who sent you the payment(s), and

• The PSE with respect to the participating payees to whom you distribute the payments.

https://www.irs.gov/instructions/i1099k#idm140023508570640

The way I read that, you become a PSE and can issue a 1099-K.

[ILLMAS]

If a worker at a trade or business is an independent contractor, and the independent contractor swipes payment cards on behalf of the trade or business in the normal course of business (in other words, the trade or business, not the independent contractor, receives the proceeds), should the trade or business report payments to the worker on Form 1099-K or Form 1099-MISC?

In this situation, the trade or business should continue to report payments made to independent contractors on Form 1099-MISC as they have done in the past. However, the business will receive a Form 1099-K for these payment card transactions from the payment settlement entity.

 

https://www.irs.gov/payments/general-faqs-on-new-payment-card-reporting-requirements

[Patrick Michael]

Thanks for all the input.