Re: Why does Upwork NOT send a 1099-NEC?

lucykrips · ‎04-30-2021

Hello all,

As tax season is upon us, I see that several people have posted about this same issue, but I am wondering if I can get some clarity. According to U.S. tax law, Upwork *is* required to send freelancers a 1099-NEC. (See IRS link: https://www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-indepen...)

Can someone help explain why they have not sent one to me?

Thank you,

Lucy K

AndreaG · ‎04-30-2021

Hi Lucy,

We aren't able to provide tax advise here and you may want to consult with a trusted tax expert or advisor. But generally, Upwork does not send 1099-MISC or 1099-NEC notices to freelancers. Instead, in accordance to changes in IRS regulations, we send a 1099-K to freelancers who earned over $20,000 with more than 200 transactions. For more information, click here.

~Andrea

dc33eeeb · ‎02-09-2022

I'm not a tax consultant but the tax advisor I used said I have to have one from Upwork legally. Upwork swears they don't. I even contacted the IRS spent 4.5 hours on hold and was told the same thing. I can't file or I'll be rejected and / or audited. I really wish Upwork provided much better customer service and information on this.

prestonhunter · ‎02-09-2022

Two different people can have different opinions about tax law.

It doesn't mean that one of them is "wrong."

a_lipsey · ‎02-09-2022

You can absolutely file and report the income without a 1099. Your tax advisor may not be up to date on the latest laws. Last year my tax advisor wasn't aware of tax requirements around PPP loan forgiveness. You can report income without having a 1099, and you can file the taxes. No whether or not Upwork is required to send you one is another matter. Upwork states that they do not send unless you had over 200 transactions and $20,000 in payments (I think that's the number). This is in line with IRS requirements for the tax year in question.

wescowley · ‎02-09-2022

Danielle D wrote:
I'm not a tax consultant but the tax advisor I used said I have to have one from Upwork legally. Upwork swears they don't. I even contacted the IRS spent 4.5 hours on hold and was told the same thing. I can't file or I'll be rejected and / or audited. I really wish Upwork provided much better customer service and information on this.

You can file income without a 1099. I've only gotten one from Upwork one year out of three so far, and most of my off-platform clients don't bother sending them. Assuming you're filing on schedule C, there's a box for income that hasn't been reported on a 1099.

patchworksvideo · ‎01-01-2023

You do not have to have one from Upwork legally, unless you crossed the threshold for Form 1099-K (not 1099-NEC).

From the instructions from Form 1099-NEC (emphasis added) :

"Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-NEC. See the separate Instructions for Form 1099-K."

Upwork processes payments as a third-party network. Therefore, you'll never, ever see a 1099-NEC from Upwork – and your clients shouldn't be trying to send you one, either! Instead, Upwork operates under rules for 1099-K. More on that here:

https://support.upwork.com/hc/en-us/articles/211067918-Tax-Requirements (see specifically the FAQ "Why don’t I have to send a 1099-MISC, 1099-NEC, or 1099-K?")

The 1099-K rules (as of January 2023, for the 2022 tax year) require the form for at least $20,000 and 200 transactions. There was a change to $600 for the 2022 tax year, but this was reversed in late 2022, and some of the Upwork help pages haven't quite caught up with the change yet.

Therefore, unless you earn over $20,000, you might not receive any tax forms, at all, from Upwork, and this is entirely fine by rule. However, you MUST still report that income when you file your taxes, regardless of amount, no matter how small.

Talk to your tax advisor to properly report it. If you do it in software, your software may separate out entries for self-employment income that IS reported to you on form 1099-NEC or 1099-K, and other self-employment income that is NOT reported to you on a 1099. If you don't receive a form, then you go into that latter area (much as you'd do if a client paid you $100 cash for services and didn't send you a 1099-NEC, because they weren't required to).

Remember, however, that you can (and must, actually) report that income on your tax return; it's all subject to tax, even if it doesn't cross the 1099 reporting thresholds.