A general contractor pays an unincorporated subcontractor $3,400 over the calendar year for services. For federal and California tax reporting, the contractor must issue which form to the subcontractor?
Explanation
Under IRC §6041/§6041A (mirrored by Rev. & Tax Code §18631), service payments to a non-corporate payee are reported on Form 1099-NEC once they reach the annual threshold, which for tax year 2026 is $2,000, raised from the long-standing $600, so $3,400 is reportable (c). (a) is wrong because CSLB licensure has nothing to do with federal or state information reporting; only payments to corporations, other than legal and medical, are generally exempt. (b) picks the right reasoning but the wrong form: since tax year 2020 the 1099-MISC no longer carries nonemployee compensation, which moved out of its Box 7 to the 1099-NEC. (d) is for employees; a subcontractor is not on payroll and receives no W-2.
Law Reference: Internal Revenue Code §6041 (CA Rev. & Tax §18631)This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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