The deadline to e-file forms 1099 with the IRS is January 31. Penalties of $50 per late 1099 begin on February 1!
If, related to your business or rental property, you paid anyone $600 or more during 2016, you might need to issue IRS Forms 1099-MISC to those people and businesses.
When you must issue a 1099-MISC
The Internal Revenue Service requires you to report certain payments you make as part of your business.
If the following four conditions are met, you must generally report a payment as non-employee compensation.
* You made the payment to someone who is not your employee;
* You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
* You made the payment to an individual, partnership, LLC, estate, or, in some cases, a corporation; and
* You made payments to the payee of at least $600 during the year.”
What should you include on Form 1099?
Generally, you do not issue a Form 1099-MISC for non-employee compensation paid to a corporation. Payments to corporations are reported only if they are for medical, health care, veterinary, legal or fishing activities.
EXAMPLE: If a business paid a self-employed photographer, Smith Photography, an unincorporated sole proprietor who files a Schedule C, $750.00 for taking publicity photos or photos used in a catalog, the business would have to issue a Form 1099-MISC. If the photographer was Wilson Photography, Inc. no Form 1099 would be required.
Payments for rent, made by your business, are also subject to 1099 reporting.
You must include the payee’s Social Security Number or Employer Identification Number and legal address on the Form 1099. If you do not have this information, have the payee complete Form W-9 and return it to you. You don’t need the original form; a copy is acceptable. Our firm recommends that you obtain a completed Form W-9 from any new contractor BEFORE you issue any payments to them.
Having Tax Partners Northwest prepare the forms
We are able to prepare forms 1099-MISC and e-file them for you. There is an additional charge separate from your income tax preparation for this service. In order to complete these forms:
Please provide us with a list of those contractors you need to issue a form to. We will need:
Name as it appears on the payments you made.
Address of the person you paid.
Social security number or employer identification number of the person you paid.
Total amount you paid them during 2016.
We are available after January 2 to start filing 1099 forms, and would prefer to do them as soon as possible. After January 21, please call our office before submitting your 1099 documents to us.
Any questions? Call us at 425-582-8269.