Resources:
Why YOU Should Care:
If you paid an individual, Limited Liability Company, Partnership, or Estate $600 or more for services to your business last year, you may owe them a Form 1099-MISC to report the income. These forms must be sent to recipients by February 2, 2015.
Basic Guidelines
For business owners, Forms 1099-MISC are most commonly used to report the following payments:
- $10 or more in royalties paid in one year
- $600 or more in payments to nonemployees and/or contractors
- $600 or more in rents, prizes, or other income paid in one year
Typically, the deadline to send the Form 1099-MISC to the recipient (via email or traditional mail) is January 31 of the following year. However, in 2015, as January 31 falls on a Saturday, the deadline is moved to the following Monday, February 2, 2015.
When you file your tax return to report business income – Schedule C for sole proprietors and single member LLCs, Form 1065 for partnerships, and Form 1120S for S-Corporations – you will be asked to verify that you sent out the Forms 1099-MISC to required recipients.
Note: While the IRS posts a version of the Form 1099-MISC online, heed the warning on page 1. You cannot print this version from the website and file it. Rather, you need to order the proper, pre-printed, scannable forms from the IRS or talk to your tax adviser about proper filing.
Best Practices
Before you have someone perform work for your business, ask them to complete a Form W-9 so you have all the information you need for the upcoming Form 1099-MISC filing season. This information includes:
- Their full legal name
- The name of their business, if different
- Their current address
- Their Employer Identification Number or Social Security Number
Frequently Asked Questions
Do I have to send a Form 1099-MISC to a foreign individual or company?
If the work done was performed in the United States, yes, you must issue a Form 1099-MISC. However, if the worker is a non-U.S. citizen AND all the work was performed outside the United States, you are not required to issue a Form 1099-MISC.
Do I have to send a Form 1099-MISC to a corporation?
Generally, no. However, the following exceptions exist:
- Medical and healthcare payments (report in Box 6)
- Cash purchases of fish (report in Box 7)
- Payments to attorneys (report fees in Box 7 and/or gross proceeds in Box 14)
- Payments in lieu of dividends or tax-exempt interest (report in Box 8)
- Payments for services by a federal executive agency (report in Box 7)
Outside of those exceptions, there is no requirement to issue a Form 1099-MISC to corporations. This rule extends to Limited Liability Companies that elect to be taxed as C- and S-Corporations.
Do I have to send a Form 1099-MISC for personal services?
No. Forms 1099-MISC are used to report money paid for services to your business. You do not owe Forms 1099-MISC to individuals who performed personal services (e.g., the electrician who installed a ceiling fan in your home, your hairdresser, etc).
Do I have to send a Form 1099-MISC when I purchase goods or merchandise from an individual or company?
No. Forms 1099-MISC are not required to report payments for goods or any freight or storage costs associated with that purchase.
