1099 Reporting

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I've always found the reporting requirements for 1099's to be somewhat confusing. From what I understand, if a business is incorporated or is an LLC that is taxed as a corporation, you do not need to issue them a 1099 form (exception: proceeds paid to attorneys). If they are an individual/sole proprietor, disregarded entity, partnership, or and LLC taxed as a partnership then you do need to send them a 1099. Is this correct? Also, it says a 1099 should be issued for medical and health care payments - would we issue one to the local hospital we paid to come to our company and administer flu shots? Finally, our "management team" gets free lunches each day (paid for by the company). Some of the W-9's I received from these eateries indicate they are partnerships - would I issue them a 1099?

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The penalty for getting it wrong is pretty severe. I'd rely on professional advice rather than FW.

If they are an individual/sole proprietor, disregarded entity, partnership, or and LLC taxed as a partnership then you do need to send them a 1099. Is this correct

Yes that is correct. If the W9 contains a SSN, definitely yes. (For example, a janitorial company who cleans your office)

Some of the W-9's I received from these eateries indicate they are partnerships - would I issue them a 1099?

Yes.

would we issue one to the local hospital we paid to come to our company and administer flu shots?


I would imagine that your local hospital is incorporated. You wouldn't have to issue a 1099 for something like this but if you didn't it wouldn't be the end of the world. They would just ignore it.

Gross proceeds paid to attorneys really only covers settlements. The IRS informational form gives you very little on what goes in this other than settlements. Retainers and payments to attorneys is viewed as Non-employee compensation (Box 7), at least according to the informational form.

Just so you know...

I have done 1099s for my company going on 3 years now and actually finalizing them for my company now (multi-million dollar company). A tax professional (fellow employee) and I recently went over all the rules. They are fresh in my mind.

TravelerMSY said:   The penalty for getting it wrong is pretty severe. I'd rely on professional advice rather than FW.

The penalty is severe if you intentionally disregard filing them, otherwise $50 per form for not filing.

I wouldn't lose sleep over the caterer, if in doubt just send one. You don't have to file with the IRS until 2/28 which gives at least a four week window for the recipient to contact you if there is an issue with one you send and you to void or correct before filing.

Small Correction, if you e-file it's 3/31. If you hand file it's 2/28.

thanks everyone for your help, much appreciated! I was able to dig up some additional information as well.
Utilities are not 1099-reportable payments, including monthly bills for cell phones and Internet service. This includes heat, electricity, water, garbage (monthly service, not periodic trash pickups), cable/satellie and other tv hookups (not advertising or other services), telephone and cell phone service and internet access.
Also, food vendors are only reportable if they provide catering service as well (just having food delivered doesn't qualify)

Generally, payments to corporations are not reportable. See Regulations section 1.6049-4(c)(1)(ii). However, you must report payments to corporations for the following.

Medical and health care payments (Form 1099-MISC),

Withheld federal income tax or foreign tax,

Barter exchange transactions (Form 1099-B),

Substitute payments in lieu of dividends and tax-exempt interest (Form 1099-MISC),

Acquisitions or abandonments of secured property (Form 1099-A),

Cancellation of debt (Form 1099-C),

Payments of attorneys' fees and gross proceeds paid to attorneys (Form 1099-MISC),

Fish purchases for cash (Form 1099-MISC),

The credits for clean renewable energy bonds, Gulf tax credit bonds, and other qualified tax credit bonds treated as interest and reported on Form 1099-INT,

Merchant card and third-party network payments (Form 1099-K), and

Federal executive agency payments for services (Form 1099-MISC). For additional reporting requirements, see Rev. Rul. 2003-66 on page 1115 of Internal Revenue Bulletin 2003-26 at www.irs.gov/pub/irs-irbs/irb03-26.pdf.


Reporting generally is required for all payments to partnerships. For example, payments of $600 or more made in the course of your trade or business to an architectural firm that is a partnership are reportable on Form 1099-MISC.



You probably need to get the IRS regulations to see if they apply to your situation. Or ask someone who is familiar with them.

1099 instructions



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