1099 tax formOf all the year-end tasks your business needs done, getting 1099s out to the right vendors, contractors and other paid non-employees is critical to start NOW.

Why? Because it is a multi-stepped process: You need to send them out correctly. Your vendors/contractors need to receive the right FORMS, in the right AMOUNTS, and at the right ADDRESSES (which can change during a year). If any single error is made, you are then both behind. And your business will need to take time rushing to redo one or more of the above.

We’ve compiled a 101 guide for you, based on information from the IRS. Pay attention to the deadlines posted. The new dates changed from February 28 to January 31.

What Amount Paid Requires a 1099-MISC Form?

  • File a 1099-MISC form for each person/entity you paid at least $600 to during the year.
  • The 1099 rule also applies to those you paid over $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
  • Corporations you hired do NOT need a 1099 form, unless it is considered a “reportable payment.”
  • Attorneys, even if part of a company, also are an exception and require a 1099 from you.
  • Payments made to tax-exempt organizations do NOT require a 1099.

Who Do I Need To Send a 1099 Form To?

Go through your list of who you paid or awarded anything over the past 12 months. The most common categories include:

  • business landlord/rent payments
  • non-employees performing services
  • those who received prizes and/or awards
  • other income payments
  • medical and health care payments
  • crop insurance proceeds
  • generally, cash paid from a notional principal contract to an individual, partnership, or estate
  • payments to an attorney
  • payments to an accountant

Information You Need To Gather Now

Request that individuals and vendors complete a Form W-9. This form must be returned to you. You will need the individual’s name, address, and social security number for the 1099 form. If they are a corporation, they will fill in the information and check the box for “corporation.” These individuals/organizations do NOT need a 1099 from you, unless they fall into the exceptions we listed above.

 

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