Generally, a 1099-MISC should be issued to any individual or entity paid $600 or more for non-employee compensation, rent, prizes, awards and other types of income. This includes payments to attorneys, accountants, independent contractors, consultants, and web designers. Rent paid to a landlord is another reportable payment that is sometimes overlooked. You don’t need to issue a 1099 to corporations (with some exceptions), or for payments made via credit card or a third party network.
What is non-employee compensation? If the following four conditions are met, you must generally report a payment as NEC.
- You made the payment to someone who is not your employee.
- You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
- You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
- You made payments to the payee of at least $600 during the year.
What information do you need to file a 1099? The standard way to get the information you need to file a 1099 is to ask your contractor/vendor to fill out Form W-9. This form will provide you with all the information needed to file a 1099. It is always a good idea to obtain a W-9 from a vendor before you pay them. This way, you will have the information you need to file a 1099 without the hassle of tracking them down later.
Where can I find a W-9 form? You can get one from the IRS’s website at www.irs.gov/pub/irs-pdf/fw9.pdf
On a W-9 form, the Social Security Number and Tax ID Number are the most important. Without these, the IRS can’t properly match up the 1099MISC forms that you report with the tax returns that are filed by the people and businesses you gave them to. If you don’t prepare and file 1099-MISC, or if your data is wrong, it is your responsibility to correct it or face fines and penalties unless you can show that you properly reported what you were given.