Whether you are a for-profit or nonprofit business you are required to report various parments you make to non-employees each year. These payments are reported on IRS Form 1099, of which the most common is the 1099-MISC. Following are 2 things you should know about issuing a 1099:
- It is recommended that you request all contractors/vendors to complete a W-9 Form prior to paying their first invoice. The W-9 will identify them as an incorporated business or an independent contractor and provide you with the necessary information for filing the 1099 at year’s end.
- When to issue a 1099-MISC (Miscellaneous Income):
You must issue a 1099-MISC if in the course of your trade or business you made payments to any one payee in aggregate of:
– $10 or more for royalties
– $600 or more for rents, prizes and awards etc. that were not for services rendered
– $600 or more for fees, commissions, services (including parts and materials), medical or health care payments or other forms of compensation to persons not treated as employees for services rendered in your trade or business
– Any amount to attorneys for legal services, including law firms operating as a corporation; or
– Any amount of federal income tax withheld on miscellaneous income under the backup withholding rules.
Specific questions about 1099-MISC and how they may pertain to you? Call our offices at 802.878.1963 for assistance.
Davis and Hodgdon Associates CPAs has been assiting nonprofits, individuals and businesses with tax, accounting, and financial planning services in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].