1099 Filing Requirements
When are 1099s required?
- The payment was made to a nonemployee.
- The payment was made for services to the trade or business.
- The payment was to an unincorporated entity (e.g., an individual, a partnership, a limited liability company).
- The payment or payments totaled $600 or more for the year
There are a few notable details aside from the aforementioned requirements. Generally, payments to corporations are not reportable. However, there can be instances where it is necessary to issue a 1099 to a corporation. In addition, 1099s must be issued for any and all payments to attorneys, including corporations, for services in the course of a trade or business. Payments made using a credit or debit card are exempt from the Form 1099-MISC requirements. Also, the fact that some payments may not be reportable on Form 1099 does not necessarily mean the payments are exempt from income tax. It is also important to note that an individual (not a business) who pays for a personal service is not required to file a 1099-MISC since the individual did not pay for the service in the course of a trade or business (or rental activity). However, special rules apply if you qualify as a household employer (W2s, payroll taxes, etc).
Required information for filing 1099s
Social security number or EIN
Total amount paid to the payee in 2017
Type of expenditure (generally Rents or Nonemployee compensation).
Deadlines and penalties
Filed more than 30 days late: $100
Filed after August 1, 2017: $260
Not filed: $260
How to comply
Our firm is available to help you comply with the Form 1099 requirements. We ask that you provide us the required information (see above) by January 12th, 2018 to ensure your Forms 1099 are processed by the January 31 due date. We will prepare the payee copies and file all required information with the IRS and State of Michigan.
Should you have finalized information for any vendors/payees, we encourage you to submit that information to us at your earliest convenience.
Alternatively, you may prepare the Forms 1099 on your own by ordering forms from the IRS or an office supply store, but remember that you must also submit copies to the IRS and State to avoid penalties.
Unless you specifically engage us to prepare your 1099s, we will assume you are preparing and filing Forms 1099. If you are audited, the IRS will want documentation of expenses and will look at whether 1099s were filed.
For questions or more information, please contact our office.