W-9/1099, Taxes, and Sales Tax

Do I need to collect a W-9 from subcontractors?

Generally yes — if you pay a subcontractor for services and may need to issue them a 1099-NEC, you should collect a completed W-9 from them before or when you start paying them.

A Form W-9 collects a subcontractor's legal name, business structure, and taxpayer ID number, which you need on file to correctly prepare any required 1099-NEC at year-end. Best practice:

• Collect the W-9 before the first payment, not scrambling for it at tax time
• Keep it on file for your records, even if the subcontractor ends up under the reporting threshold
• Confirm with your CPA whether your specific payment arrangement triggers a 1099-NEC filing requirement

This is a tax compliance matter specific to your business structure and payment volume, so confirm your filing obligations with a licensed CPA.

BCTM does not collect or manage W-9 forms, but its reports can help you track total payments made to a given subcontractor across the year for your own 1099 preparation.

What's the 1099-NEC threshold this year?

As of 2026, the 1099-NEC reporting threshold for payments to independent contractors is $2,000, up from the previous $600 threshold, effective for payments made starting January 1, 2026.

Under recent federal tax legislation, the threshold for issuing a 1099-NEC (or 1099-MISC) changed significantly:

(Source: Warp — 1099 Reporting Changes in 2026)

Because this reflects a recent legislative change and thresholds can be revisited, confirm the current-year threshold directly with the IRS or your CPA before relying on it for filing decisions.

Will Stripe send me a 1099-K for the payments I process?

Yes — Stripe, as the payment processor behind Stripe Connect, issues a 1099-K to connected accounts that meet the applicable reporting threshold, currently $20,000 in gross payments and 200+ transactions federally.

As of 2026, the federal 1099-K threshold for third-party payment platforms (Stripe, PayPal, Venmo, etc.) is $20,000 in gross payments AND 200+ transactions in a calendar year — both conditions must be met — restored under the One Big Beautiful Bill Act signed July 4, 2025, applying to tax years 2025 and 2026 onward (Warp — 1099 Reporting Changes in 2026).

Importantly, several states set their own, lower 1099-K thresholds that override the federal one — some as low as $600 (Massachusetts, Maryland, Virginia, Vermont), and Rhode Island as low as $100. Your Stripe connected account will issue a 1099-K based on whichever threshold — federal or your state's — applies to you.

BCTM processes payments through Stripe Connect, and Stripe issues 1099-Ks to connected accounts per applicable federal and state thresholds. BCTM does not prepare or file tax forms itself.

What's the 1099-K threshold for payment platforms now?

As of 2026, the federal 1099-K threshold is $20,000 in gross payments and 200+ transactions in a calendar year, though several states set their own lower thresholds that can override the federal figure.

(Source: Warp — 1099 Reporting Changes in 2026)

Because state thresholds don't automatically match federal law and can be much lower, check whether your state has its own lower 1099-K threshold that applies to you, in addition to the federal figure.

Is sales tax charged on labor or just materials?

It depends entirely on your state — some states tax both labor and materials, some tax only materials, and some exempt certain types of labor or trades entirely, so confirm the rule for your specific state and service type.

There is no single national rule here. Sales tax treatment of labor versus materials in construction and home services varies dramatically by state, and sometimes by the specific type of work performed within a state (e.g., new construction vs. repair work can be taxed differently in the same state).

Because an incorrect assumption here can create real tax liability, confirm the specific rule for your state and trade with your state department of revenue or a licensed CPA rather than applying a general rule.

BCTM lets you apply tax rates to labor and materials line items independently once you've confirmed the correct treatment for your state and service type.

Do handymen have to charge sales tax?

It depends on your state's rules for labor and repair services, which vary widely, so confirm your specific state's requirements rather than assuming handyman work is or isn't taxable.

Whether handyman services are subject to sales tax depends on how your state classifies repair and maintenance labor versus new construction or materials, and this classification differs significantly across states — some exempt most repair labor, others tax it fully, and some only tax the materials portion of a job.

Given this variability, check directly with your state's department of revenue for the specific rule that applies to the type of work you do, rather than assuming a rule from another state or a general industry assumption applies to you.

BCTM lets you configure tax rates per line item once you've confirmed the applicable rule for your state and service type.

How do I track 1099 payments to subcontractors I hire?

Keep a running record of total payments made to each subcontractor over the calendar year, along with their W-9 on file, so you can determine at year-end whether a 1099-NEC filing is required.

Practical steps for tracking payments to subcontractors throughout the year:

1. 1.Collect a W-9 from each subcontractor before or when payments begin
2. 2.Log every payment made to that subcontractor, including the date and amount
3. 3.Total payments per subcontractor at year-end and compare to the current 1099-NEC threshold
4. 4.Confirm filing requirements with your CPA, since payment method (e.g., paid via a third-party network versus direct payment) can affect which form applies

Keeping this data organized throughout the year, rather than reconstructing it in January, avoids scrambling at tax season.

BCTM's expense and payment reports can track payments recorded against a given subcontractor or vendor over time, helping you total amounts for year-end 1099 preparation. BCTM does not prepare or file 1099 forms.

Do I owe taxes on cash jobs I don't invoice?

Yes — income is taxable regardless of whether it was invoiced, paid in cash, or documented at all; failing to invoice a job does not change your tax reporting obligation.

The IRS requires reporting of all income, including cash payments for services, whether or not a formal invoice was created. Skipping an invoice doesn't create a legal exception to reporting requirements — it simply removes your own documentation of the transaction, which can create problems for you if your income is ever questioned or audited.

Because this touches directly on tax compliance and potential penalties for underreporting, this is not something to handle based on general guidance. Consult a licensed CPA about your specific income reporting obligations, and review IRS.gov guidance on reporting cash income.

BCTM lets you log a cash payment against an invoice or job record, which creates a documented trail of income received even for cash-only jobs. BCTM does not provide tax advice or file taxes.