Don’t Miss the Deadline to Issue 1099’s
1099-MISC Thresholds and Reporting Requirements
File this form for each person to whom you have paid during the year.In general, companies must send 1099-MISC forms if they’ve paid a nonemployee $600 or more during the year. But, there are other requirements depending on the type of payments and the relationship between the payor and payee. According to IRS guidance, a form 1099-MISC may be required if a company makes the following types of payments:
- Royalties: At least $10 in royalties .A common example of a royalty payment is a payment made to an author for the right to publish or distribute the author’s work.
At least $600 in:
- Rents: In most cases, this is where rental payments are reported if your business rents property, such as equipment, cars or real estate
- Services performed by someone who is not your employee: Examples of services are professional fees paid to attorneys, accountants, engineers, directors, speakers, etc.; repairs to office machines, equipment, etc.; installation services, landscaping services, marketing services, etc.
- Prizes and awards: This applies to general prizes and contest winners that your business has awarded. Yes, even winners may have to pay taxes on prizes.
- Other income payments: These type of payments are also reported in box 3. A common example is payments for punitive damages.
- Medical and health care payments: You must report any payments made in the course of your trade or business to doctors or other suppliers/providers of medical services.” Examples include payments for lab work, physical exams, hospital fees/charges, etc. Unlike several other payments types, medical and health care payments must be reported even if paid to corporations. Payments to tax-exempt hospitals are not reportable, only payments to for-profit hospitals are reported.
- Attorney fees: Payments made to an attorney in the context of a legal settlement are typically reported in Box 14. For any legal services given directly to a company/payor, then the service fees to an attorney are typically reported in Box 7.
The deadline to file is January 31st; you are almost guaranteed an audit or tax notice if you fail to report a Form 1099.
Reach out to your accountant TODAY if you are unsure if you need to issue 1099s.