Contractor Tracking (1099-NEC)
Overview
Section titled “Overview”The Contractor Tracking skill identifies payments to independent contractors and freelancers, totals by recipient, and flags those requiring 1099-NEC forms ($600+ threshold).
1099-NEC Requirements
Section titled “1099-NEC Requirements”- Threshold: $600 or more paid to a single contractor in a calendar year
- Who needs one: Non-corporate individuals/entities paid for services
- Filing deadline: January 31 of the following year
- Penalties: $60-$310 per form for late/missing 1099s
Payment Identification
Section titled “Payment Identification”Wilson looks for these transaction patterns:
- Payment apps to individuals — Venmo, Zelle, PayPal (business), Cash App
- Direct payments — Wire transfers, checks to individuals
- Freelance platforms — Fiverr, Upwork, Toptal (platforms may issue their own 1099s)
- Professional services — Bookkeeping, design, development, consulting
- Recurring payments to same payee — Regular monthly or project-based payments
Workflow
Section titled “Workflow”- Identify contractor payments — Searches for payments matching contractor/freelancer patterns
- Group by contractor — Groups payments by recipient and totals for the year
- Apply 1099 threshold — Flags contractors with $600+ total:
- 1099-NEC Required — $600 or more
- Watch — $500-$599 (approaching threshold)
- W-9 Needed — Contractors missing taxpayer ID
- Generate tracking report — Contractor summary table, total spend, number of 1099s required, filing deadline reminder
- Export — Exports contractor payment details for filing
Important Notes
Section titled “Important Notes”- Payments to corporations (Inc., LLC taxed as corp) generally do NOT require 1099s.
- Payments for goods (not services) do NOT require 1099-NEC.
- Platforms like Upwork may issue their own 1099-K — avoid double-reporting.
- Collect W-9 (taxpayer ID) BEFORE making first payment to a contractor.