Form 1099 Reporting

1099 Reporting Requirements

The IRS focuses heavily on taxpayer compliance with information reporting laws. Penalties for noncompliance have steadily increased over the years.

Who are you required to send a Form 1099?

• You are required to send Form 1099 to anyone you pay more than $600 for services during the calendar year.
• Those include any individuals, partnerships, Limited Liability Companies (LLCs), Limited Partnerships (LPs) or estates.

Who are considered vendors or subcontractors?

• Any person, or company you have paid for services that isn't an employee.

What information needs to be collected for Form 1099?

• Vendor name and mailing address
• Tax ID number
• Entity type
• Amount paid during the year
• What payment was for (to file applicable 1099)

Exceptions

Are there exceptions to who gets a 1099?

The list is lengthy. The most common exceptions are:

• Vendors that are C-Corporations or S-Corporations
• Sellers of merchandise, products, freight, storage, or similar items
• Payments of rent to or through real estate agents
• Credit card payments and PayPal payments

The IRS allows taxpayers to exclude from filing Form 1099 any payments reported by the credit card issuers and third-party payment networks on Form 1099-K.

Tips & Best Practices

• Always request a Form W-9 from any vendor or subcontractor you expect to pay more than $600 before you pay them.
• Requesting Form W-9 from your vendors and subcontractors is a normal business practice.
• Fees, commissions, service awards, etc. are required to be reported on Form 1099-NEC.
• All other forms of payment continue to be reported on Form 1099-MISC.

If you're a business owner in the New York Metro Area and need help making the best decisions for your business, request a consultation with our experienced accountants today. We look forward to providing you service.