The basic rule is that you must file a 1099-MISC forms when you pay an independent contractor (sole proprietor type) $600 or more in a year payments you made by cash or check. ( https://www.irs.gov/pub/irs-pdf/i1099msc.pdf )
Beginning with the 2011 tax year, the IRS requires you to exclude from Form 1099-MISC any payments you made by credit card, debit card, gift card, or third-party payment network such as PayPal. If they meet the requirements, these payments are being reported by the card issuers and third-party payment networks on Form 1099-K.
In QuickBooks, here is a reference list of codes to use when you record payment transactions to exclude:
Here is another helpful article to get familiar with 1099 exclude rules.
http://payroll.intuit.com/support/kb/2001238.html
Note: In QBO, 1099 vendor feature is available in PLUS version only.
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