Successfully Grow Your Small Business with These Key GuidelinesDecember 12, 2019
Deadline Approaches for 1099-Misc
What You Need to Know
With the rise of the gig economy, a growing number of professionals are operating as independent contractors. Here’s how to stay in good standing with the IRS regarding your payments to them.
- The deadline for filing the 1099 to the IRS and to the recipients is January 31.
- Business owners and landlords are required to issue IRS Form 1099-Misc to each person/entity who has been paid $600 or more for rents, services, prizes and awards, other income payments and medical and health care payments.
- All business owners should have on file form W-9 for all of its vendors and service providers. This would aid in determining who should be issued a 1099.
- 1099s are issued based on the federal tax classification indicated on form W-9. Businesses with the tax classification of corporation are exempt from having to be issued a 1099.
- A 1099 must be issued to all attorneys & law firms regardless of their tax classification.
- Payments made by credit card are excluded from IRS reporting on Form 1099-Misc.
- Barter payments for services are excluded from 1099-Misc reporting. Barter exchanges will typically account for the transactions on IRS Form 1099B.
- Reimbursement of accountable expenses with receipts and all supporting documentation are excluded from 1099-Misc reporting.
- The new reporting requirement applies only to Form 1099-Misc and reporting amounts in Box 7. Amounts reported not in Box 7 retain the original reporting deadline of February 28 for paper filings or March 31 for electronic filings.
- Best practices dictate that the accounting department obtain the W-9 prior to the service provider or vendors commencing work.
- Please refer to www.irs.gov/form1099misc for instructions relating to 1099-Misc preparation and reporting.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Hart Vida & Partners recommends that you consult professional tax, legal and accounting advisors before engaging in any tax, legal and accounting action or transaction.
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