With the arrival of 2020, it’s time for issuing 2019 1099-MISC forms.  Forms for non-employee compensation (box 7) must be provided to recipients and the IRS by January 31, 2020 per the IRS. If filing a 1099-MISC form for other than non-employee compensation, it is best to refer to the 2019 General Instructions for Certain Information Returns for the relevant due date. https://www.irs.gov/pub/irs-pdf/i1099gi.pdf  A Form 1096 should be included with your filing. Filers with more than 249 forms are required to file electronically.

Who must file?

Generally, report on form 1099-MISC only when payments are made in the course of your trade or business.  (Personal payments do not apply.) There are exceptions including qualified pension or profit-sharing plans of employers, some exempt organizations, and payments by federal, state or local government agencies.

Who should receive a 1099?

In general, the following situations will require a Form 1099:

  • For payments in the amount of $600 or greater for the following: rents, services performed by a non-employee, prizes and awards, other income, medical and health care, crop insurance proceeds, cash payments for fish or other aquatic life you purchase from anyone engaged in the trade or business of catching fish, cash paid from a notional principal contract to an individual, partnership or estate, payments to an attorney, any fishing boat proceeds, director’s fees;
  • Direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment;
  • Each person from whom you withhold federal income tax under the backup withholding rules.

There are exceptions to the above criteria. One general exception is payments to a corporation including an LLC that is treated as a C or S Corporation for tax purposes. Prior to paying a vendor, businesses should obtain a W-9 from all vendors in order to determine whether or not a 1099 form is necessary. If the vendor will not provide a valid TIN, then the business must withhold 24% from their payment. Failure to follow backup withholding rules can result in penalties to the payer.

If you have any questions, please contact our accounting and financial outsourcing group at ddaf1099@deandorton.com or by calling (859) 255-2341.

Written by Gina Whitis, Dean Dorton