Just as important as a W2 is a 1099-Misc. 1099-Misc need to filed by January 31 of every year just like W2s.
If a 1009 is not filed, the deduction may be disallowed and there may be penalties.
When does a 1099 need to be filed?
Here is a check list for reporting on 1099-Misc.
1. Was a service provided in the course of a trade or business?
- Services include: rent, attorney’s fees, and independent contractor fees
- 1099-Misc do not report purchases of goods
2. Was the amount over $600?
- If the payment is under $600 per independent contractor or attorney, then the payments do not need to be reported on a 1099-Misc.
- If the payment for rent was under $600 or the rent was paid to a real estate agent, then the payments do not need to be reported on a 1099-Misc.
- Prizes and awards including non-cash prizes and awards valued over $600 are required to be reported on a 1099-Misc.
3. Was the payee a corporation?
- Payments to a corporation are generally not required to be reported on a 1099-MISC. Payments to a corporation are to be reported if they are payments for:
* medical and health care,
* fish purchases for cash,
* attorney’s fees,
* gross proceeds paid to an attorney (legal settlements),
* substitute payments in lieu of dividends or tax-exempt interest
4. If royalties of more than $10 were paid then the payments are to be reported on a 1099-MISC
5. Were there direct sales of at least $5000 of consumer products to a buyer for resale in any location other than a permanent retail establishment?
- This is the only time the sale of goods is reported on the 1099-Misc.
If you have any questions on filing 1099-Misc for your business please give us a call and we would be glad to answer your questions. If you would like to forget about all the hassle of these forms, then we would be glad to complete these forms for you.
