2017 Form 1099 News Alert – Here is what you need to know.

When:
1099s are required to be sent to vendors by January 31, 2018 and the corresponding 1099s and summary Form 1096 are also required to be sent to the IRS by January 31, 2018.

1099 FormWho needs to be issued a 1099-MISC?
Generally, you should include all vendors to whom you’ve paid $600.00 or more during the year that are not incorporated. Your list likely includes individuals, partnerships, and some corporate entities, including:

  • Contractors
  • Non-employees
  • Rental payments for office space, equipment, or machinery
  • Royalties paid in the amount of $10 or more

Exception: Attorneys should be issued 1099s, regardless of whether the attorney/firm is incorporated or not incorporated.

Why:
Why are these forms required in the first place? The payments made to vendors are a tax-deduction to your business. By issuing 1099s, you not only verify your expenses but also help the IRS track keep track of who received the income and match that to their income tax returns.

If the rule requiring that you file 1099s is not compelling enough to earn your attention, be aware that stiff penalties may be imposed for failure to file the forms as well as failure to furnish them to the recipients of the payments. Although most penalties are around $30-$100 per return, a business can be charged a maximum penalty of $1,500,000 ($500,000 for small businesses).

We recommend that before engaging in business with new vendors, you ask them to complete Form W-9, which can be found on the Internal Revenue Service (IRS) website at www.irs.gov. This will ensure that you have the necessary information to complete and submit 1099s that meet the IRS requirements.

Beware!! Do NOT include amounts paid to vendors via credit card in the totals reported on 1099s. The credit card companies will already be reporting this income to vendors.

One final reminder: Remember, this is a requirement that applies to businesses. If you make these or similar payments as an individual, not a business, you are not required to issue a 1099.

If you still have questions or need assistance, our office is here to help.

Speak Your Mind

*