1099-NEC for a contractor paid via Stripe — do i need to issue one?
client paid a designer $4,200 through Stripe (contractor, individual, has W-9). the Stripe account charges client's card and deposits to the designer.
question: who issues the 1099? my instinct says Stripe issues a 1099-K to the designer (they're the payee of record via the processor), and client does NOT issue a 1099-NEC because the payment went through a third-party settlement organization.
but the $4,200 is below the 1099-K threshold (which is $2,500 for 2025, dropping to $600 for 2026). so Stripe might not issue either. then what?
the correct answer is client issues nothing right? 1099-NEC rules have the credit card / third-party processor exception in Notice 2014-7.
2 replies
yes — TPSO/credit card exception in Regs §1.6041-1(a)(1)(iv). if payment flowed through Stripe, your client doesn't issue 1099-NEC regardless of amount. Stripe is responsible for 1099-K reporting if threshold met.
the contractor's income is still taxable of course. they just don't get a 1099-NEC from your client.
common mistake i see: clients issuing 1099-NEC anyway "to be safe" — which creates a duplicate reporting problem if Stripe also issues 1099-K. better to issue nothing and let the designer self-report.
perfect that's what i thought. will tell client to stop issuing 1099s for Stripe payments going forward.
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