My wife, "Anne", is a Licensed Professional Counselor (LPC) in mental health. This past year she left her full time job as an employee of a local hospital to join a private practice, "XYZ Health, LLC". She signed an agreement whereby XYZ provides her with things like office space and supplies, software for charting and billing, advertising, leads for new clients, and the ability to accept certain health insurance, which she couldn't otherwise do on her own. In exchange for all of this, XYZ gets a cut of Anne's revenue (they refer to it as "dues"). On top of that, Anne must pay a per-session fee to one of the XYZ partners, "Beth", for professional supervision until she can get her full Licensed Clinical Professional Counselor (LCPC) license, as required by state law.
When Anne sees a client, the insurance company pays XYZ, and XYZ in turn writes a check to Anne. Now, I would have expected that XYZ would just automatically subtract out their dues and supervision fees, but that's not how they do it. Instead, they give Anne a check for the full amount, and then Anne has to write two checks back to them-- one to XYZ for dues, and a separate one to Beth for supervision. Kind of wonky, but fine.
So now tax time has come around. I normally use TurboTax for this, as our tax situation hasn't been too terribly complicated up to now. As part of the business portion, the software is asking whether Anne has paid anyone $600 as a contractor during the course of her business, presumably to determine whether a 1099 needs to be sent. I'm not sure how to answer this question.
XYZ has sent Anne a 1099-NEC for the full amount that they paid her without subtracting out the dues or supervision that Anne paid back to them. Anne has, conversely, paid more than $600 both to XYZ and to Beth. So, how does this work? Does she ultimately need to send 1099s to XYZ and/or Beth? Is this a common situation?
For the record, Anne contacted XYZ to ask about this and they said they didn't need a 1099 for either case, but I don't want to run afoul of any IRS rules by not sending them if I am required to do so.