Who Gets a Form 1099-MISC?

Resources:

Why YOU Should Care:

If you paid an individual, Limited Liability Company, Partnership, or Estate $600 or more for services to your business last year, you may owe them a Form 1099-MISC to report the income. These forms must be sent to recipients by February 2, 2015.

Basic Guidelines

For business owners, Forms 1099-MISC are most commonly used to report the following payments:

  • $10 or more in royalties paid in one year
  • $600 or more in payments to nonemployees and/or contractors
  • $600 or more in rents, prizes, or other income paid in one year

Typically, the deadline to send the Form 1099-MISC to the recipient (via email or traditional mail) is January 31 of the following year. However, in 2015, as January 31 falls on a Saturday, the deadline is moved to the following Monday, February 2, 2015.

When you file your tax return to report business income – Schedule C for sole proprietors and single member LLCs, Form 1065 for partnerships, and Form 1120S for S-Corporations – you will be asked to verify that you sent out the Forms 1099-MISC to required recipients.

Note: While the IRS posts a version of the Form 1099-MISC online, heed the warning on page 1. You cannot print this version from the website and file it. Rather, you need to order the proper, pre-printed, scannable forms from the IRS or talk to your tax adviser about proper filing.

Best Practices

Before you have someone perform work for your business, ask them to complete a Form W-9 so you have all the information you need for the upcoming Form 1099-MISC filing season. This information includes:

  • Their full legal name
  • The name of their business, if different
  • Their current address
  • Their Employer Identification Number or Social Security Number

Frequently Asked Questions

Do I have to send a Form 1099-MISC to a foreign individual or company?

If the work done was performed in the United States, yes, you must issue a Form 1099-MISC. However, if the worker is a non-U.S. citizen AND all the work was performed outside the United States, you are not required to issue a Form 1099-MISC.

Do I have to send a Form 1099-MISC to a corporation?

Generally, no. However, the following exceptions exist:

  • Medical and healthcare payments (report in Box 6)
  • Cash purchases of fish (report in Box 7)
  • Payments to attorneys (report fees in Box 7 and/or gross proceeds in Box 14)
  • Payments in lieu of dividends or tax-exempt interest (report in Box 8)
  • Payments for services by a federal executive agency (report in Box 7)

Outside of those exceptions, there is no requirement to issue a Form 1099-MISC to corporations. This rule extends to Limited Liability Companies that elect to be taxed as C- and S-Corporations.

Do I have to send a Form 1099-MISC for personal services?

No. Forms 1099-MISC are used to report money paid for services to your business. You do not owe Forms 1099-MISC to individuals who performed personal services (e.g., the electrician who installed a ceiling fan in your home, your hairdresser, etc).

Do I have to send a Form 1099-MISC when I purchase goods or merchandise from an individual or company?

No. Forms 1099-MISC are not required to report payments for goods or any freight or storage costs associated with that purchase.

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