What Business Owners Should Know About Issuing 1099's
Every year, we provide a reminder of the rules and regulations with respect to the issuance of 1099’s for the calendar year. Below you’ll find the details needed for 2020. It’s a business owner’s responsibility to comply with the following reporting requirements.
You should begin gathering the information that will be needed for preparation of Forms 1099-MISC & 1099-NEC (Non-Employee Compensation) for the 2020 tax year as soon as possible. Review the payments you have made so far to your vendors during the year. If you are a client who needs assistance in gathering this information, please contact our office.
Have you paid a single vendor a total of at least $600 during the year for any of the following?
Use Form 1099-Misc for:
Rents
Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish
Prizes or awards
Director fees
Payment to Physicians or medical offices
Generally, the cash paid from a notional principal contract to an individual, partnership, or estate; payments to an attorney.
In addition, use this form to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
Use Form 1099-NEC for:
Services performed by someone who is not your employee (including parts and materials)
Exceptions
Payments for which a Form 1099-MISC is not required include all of the following:
Generally, payments to a corporation (including a limited liability company [LLC] that is treated as a C or S corporation) except for payments made to an attorney or for fish purchases – 1099’s must still be issued for these types of payments.
Payments for merchandise, telegrams, telephone, freight, storage, and similar items
Payments made with a credit card or payment card
If you have made payments you believe may require a Form 1099 to be issued, and you do not have the EIN for this vendor on file, forward a Form W-9 to them, asking them to complete and return it to you as soon as possible. If you would like our assistance in completing and filing the required Forms 1099, please forward copies of any completed W-9’s to our office.