This is a question that we get from many of our business clients after the end of the year, “Do I need to file 1099’s?” There is now a question on the business tax returns asking whether or not you are required to file these forms and if so whether or not you filed them.
Here are the general rules. Form 1099-MISC must be filed for each payee (including partnerships and individuals who are not employees) that received at least $600 in rents, services, prizes and other income payments. Payments for services by independent contractors fall under the general rules for reporting payments of $600 or more made in the course of the payer’s trade or business. The 1099-MISC form is due February 2, 2015 to the recipient and a copy of the form is due to the IRS by March 2, 2015.
Some payments are not required to be reported on Form 1099-MISC, although they may be taxable to the payee. Examples of payments which a Form 1099-MISC is not required include:
- Payments made a corporation (including S Corporations), although there are exceptions (see below)
- Payments for merchandise, telegrams, telephone, freight, storage or similar payments
- Payments of rent to real estate agents
- Wages paid to employees (a W-2 should be issued)
Exceptions of payments made to corporations (including S corporations) that require a 1099 need not be reported unless the payments are:
- Medical and health care payments
- Fish purchases for cash
- Attorney’s fees
- Gross proceeds paid to an attorney
If you would like to learn more about filing 1099’s or would like to learn more about Paresky Flitt services, please contact Rebecca DeWolfe.