What you need to know about the 1099 form
Each year, companies must report to the IRS about certain types of payments made to third parties or attorneys during the year that were higher than $600. This information is reported on a 1099 Form. More information can be found on the IRS portal.
The 1099 Form assists the IRS in its tax return validation processes. All businesses, Type C Corporations, type S corporations, Associations, limited liability companies (LLC) and sole-proprietorships must meet this requirement if the payments meet a number of conditions.
What does it take to prepare a 1099 Form?
To prepare a 1099-MISC Form, it is necessary to ask all service providers or contractors to complete the W-9 form in which they provide their name, tax identification number and address. Download the W-9 form here.
How do I know if I have to file a 1099 form?
There are a significant number of conditions that require companies to submit a 1099 Form. In this post, we will cover the most common reasons why entrepreneurs with small and medium-sized businesses must submit this form.
- Payments to Contractors, Partnerships, and Sole-Proprietorships: Any payments of $600 or more during the year to contractors, partnerships, and Sole proprietorships must be reported in 1099-MISC form; in most cases, these are reported as "Non-Employee Compensation".
- Payments to Attorneys: All payments of $600 or more made to attorneys must be reported on a 1099-MISC form.
- Interest Payments: You have to report interest payments of $10 or more in a 1099-INT form.
- Dividend Payments: Corporations that pay dividends of $10 or more, have to report the payment in a 1099-DIV form.
- Lease Payments: Lease fees for office space must be reported in a 1099-MISC form when paid directly to the owner. When paid to a real estate agent, it is not required to issue a 1099-MISC form.
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