W9 to 1099 for independent contracts

[Justin Lee]

I have a few vendors that I paid over $600 for services that were independent contractors and wanted to know the process for taxes. I have some W9s and some I don't. How do I proceed from here to include the labor charges as an expense on my taxes?

[Michael Plaks]

@Justin Lee

If it was for services, you need W9s from everyone. If they marked "corporation" (as opposed to LLC) - you don't need to send 1099s. You also don't need to send them if you paid with credit cards or via intermediaries like PayPal Business. If you paid with cash or checks - you need to send them 1099-NEC.

I know they won't give you W9s after the fact, but at least try: send emails or texts requesting them. It might help you avoid penalties if the IRS goes after you later.

You can claim the labor expenses even without 1099s, but you will technically be in non-compliance. Also, not all labor is immediately deductible. For instance, you cannot deduct labor on an unfinished flip until it is sold.