How to Process Contractor 1099 Payments
Contractors don’t get withholding - but they do need clean reporting. Here’s how to pay them and produce 1099-NEC summaries without a year-end scramble.
Pay contractors correctly
Contractors are paid gross with no FIT/FICA/state withholding, on a payment ledger separate from employee YTD. Keeping them off the employee tax engine avoids misclassification and keeps their payments out of W-2 boxes.
For each contractor
- Record the payment as gross, no withholding
- Attribute it to the right cost center for accounting
- Keep contractors on the contractor ledger, not employee payroll
- Collect W-9 details for year-end reporting (outside the engine)
Apply the filing threshold
Filing threshold
file 1099-NEC when YTD nonemployee comp ≥ $600
A payer must file a 1099-NEC when total nonemployee compensation to a recipient for the year is $600 or more. Fintra applies this per recipient automatically in the 1099-NEC summary.
Generate the reports
Post to accounting
Contractor payments flow through the same GL export path as payroll, so nonemployee spend lands in your books alongside wage expense - one accounting story for all labor.
Frequently asked questions
Do contractors have taxes withheld?
No. Contractors are paid gross with no FIT/FICA/state withholding, on a payment ledger separate from employee YTD.
When does a contractor need a 1099-NEC?
When you pay them $600 or more in nonemployee compensation for the year. Fintra applies that threshold per recipient automatically.
Does Fintra e-file 1099s?
It produces the contractor-payments and 1099-NEC-summary reports with the threshold applied; official PDF rendering and e-file are outside Fintra today.
Do contractor payments reach my books?
Yes - they flow through the same GL export path as payroll, posting nonemployee spend alongside wage expense.
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