Tax Issues
IRS 1099 Reporting Requirements
Alert - The IRS has announced an increase in penalties for failure to file correct information returns (ie 1099s). Information and expectations regarding IRS 1099 reporting requirements are not always clear. Below is a brief explanation of IRS expectations to help you avoid the potential penalties ($520 or more per 1099) associated with a failure to file 1099s.
If you desire our assistance in preparing the 1099s your company should be issuing, or if you are still unsure of your reporting obligations, please contact us to discuss it.
Alert - 1099 Filing deadlines have changed: to IRS and recipients by 01/31/20XX. The requirement to file this early with the IRS is new for 2016.
Who must file Form 1099?
- In general, the IRS requires any individual or company engaged in a trade
or business to report payments made to others in excess of $600 for the
calendar year.
- Personal (non-business) payments are not reportable. These personal
payments are also non-deductible on your business tax return.
To whom should a business issue a 1099?
Anyone who received at least $600 in:
- Rent
- Services (including parts and materials)
- Prizes and awards
- Other income payments
- Etc.
Use Form W-9 to request the payees information for 1099 reporting. A blank W-9 can be downloaded at www.irs.gov. Hint: Its best to do this at the beginning of the year rather than at the end.
Let us Help - It can be difficult to collect W-9s. Contact our office for more information.
Exceptions
Some payments are not required to be reported on a 1099. They include:
- Payments to a corporation (Attorneys fees must be reported, even if paid to
a corporation)
- Payments for merchandise, telegrams, telephone, freight, storage, and
similar items
- Wages paid to employees
- Payments to a tax exempt organization
- Payments to a federal or state governmental agency
