Tax1099 or Track1099 When You Subcontract Dev Work to Other Shops?

Say your firm pays a solo contract developer $30,000 for a project and pays a five-person dev shop $80,000 for another. An individual you paid for services typically needs a 1099-NEC once your payments to them reach the reporting threshold for the year. The dev shop might not, if it's structured as a C-corp or S-corp, which is exactly what the W-9's box for tax classification is meant to tell you. Neither Tax1099 nor Track1099 makes this determination for you; both will file a 1099 for anyone in your uploaded list, correct or not. Get the W-9 from every subcontractor before the first invoice, not after, so this decision is already made by the time you're building your January batch.

A dev shop juggling four client engagements at once often pays the same subcontractor out of different project budgets, which can make it look like several small payments rather than one contractor relationship when you're reconciling at year end. A direct sync from your accounting system, where the vendor supports it, pulls the full payment history against a single vendor record regardless of which project code it was booked under, which matters here more than in most industries; confirm which systems are currently covered before counting on it. Track1099's CSV import works fine too, but you're responsible for making sure your export consolidates payments to the same contractor across projects before you upload it.

A subcontracted developer who mistypes their TIN on a W-9 doesn't surface as a problem until you try to file, by which point they may have already invoiced you for three months of work. What you actually want is a check that validates a new subcontractor's W-9 the day it comes in, before the first invoice clears, rather than one that only runs in a single batch at filing time; ask each vendor which one theirs does today, since a business model where new subcontractor relationships start throughout the year needs that timing more than one where filing happens in one sitting.

The median accountant or auditor salary is $83,680 a year¹, and that's roughly the hourly cost of the person untangling a subcontractor classification question mid-project instead of doing it at intake. In professional, scientific and technical services firms, payroll and contractor costs run north of 36% of revenue², so getting the classification right once, at onboarding, is cheaper than fixing it during a January filing crunch.

If the same subcontracted developer works on three separate client projects for your firm over the year, you file one 1099-NEC covering the total you paid them, not three separate forms split by project. This trips people up because internal project accounting tracks payments by client budget, while the IRS only cares about the total paid to that one payee. Both platforms total by payee correctly once the data's in the system; the risk is on your side, in how you export or map the data before you get there.

Occasionally a subcontractor's invoice covers both their development time and a license to reuse a tool or framework they built for you, which raises a real question about whether the whole payment belongs on a 1099-NEC or whether part of it should be split out separately. Neither platform will flag this for you; it's a call you make when you're coding the payment, before it ever reaches the filing tool. If this comes up more than once or twice a year, it's worth setting a standard with your CPA for how your firm structures and reports these mixed invoices so the same question doesn't get re-litigated every January. A basic rule that helps: if the invoice describes ongoing use rights to something the contractor built, treat that portion as a separate conversation from the service fee, and document the split in the contract itself rather than guessing at filing time.

Use these checks when consolidating subcontractor payments:

• Classify each payee by structure: sole proprietors generally need a 1099-NEC, while shops taxed as corporations usually don't.
• Roll payments up by vendor rather than project code, so one contractor paid from several budgets gets a single 1099-NEC.
• Validate a subcontractor's TIN when the W-9 arrives, before they have invoiced months of work.
• Ask your CPA how to treat an invoice that blends development time with a license to reuse a tool or framework.