1099 MISC

Informational Returns

The most common return form that business owners need to issue annually is the 1099-MISC. This form has 18 different categories, but the most common are:

A. Rents

  1. Office space
  2. Equipment (office equipment, construction equipment, office décor, etc.)
  3. Threshold is over $600
  4. Regardless if landlord/owner is incorporated or not

B. Royalties
  1. Music, art work, scientific works, algorithms, etc.
  2. Threshold is $10

C. Other Income
  1. Most common reason is for prize winners
  2. Medical research study participants
  3. Punitive damages (not for emotional distress or other medical payments)
  4. Threshold is $600

D. Nonemployee Compensation
  1. Most common use of this form
  2. For vendors providing a serviced business purposes (personal services not required)
  3. Examples – accountant and bookkeepers, graphic artists, engineers, contractors, etc.
  4. Threshold is $600
  5. For only those vendors that are NOT incorporated; however a W-9 on file is required

E. Gross Proceeds Paid to an Attorney
  1. For legal services regardless of whether the services are performed for the payer.
  2. Regardless if the firm is incorporated
  3. Threshold is $600

** Do not include amounts received via Merchant accounts or Third-Party Network Payments (1099-K) **

Due dates

  • Copy A & B (for recipient or IRS) due on January 31 (paper copy or electronically filed) (this is NEW for 2017)
  • 30-day extensions are available (via form 8809)

Penalties

  • $30/return if filed correctly within 30 days (maximum per year $250,000 or $75,000 for small business)
  • $60/return if filed correctly and if filed by August 1(maximum per year $500,000 or $200,000 for small business)
  • $100/return if filed correctly and if not filed by August 1(maximum per year $1,500,000 or $500,000 for small business)
  • Small business definition is any business that have average annual gross receipts for the most recent three years (or less if business is younger than three years) were $5,000,000 or less.
  • Some exceptions apply

W-9 forms

  • For a smart form go to www.irs.gov/pub/irs-pdf/fw9.pdf
  • Request one from a service provider before first payment is made. If the vendor refuses, a 28% withholding will be required and an annual 945 form (Annual Return of Withheld Federal Income Tax) will need to be filed.
  • Request a new W-9 annually for routine venders to ensure your info is current.
  • The IRS has a TIN/name matching program. They will contact you if any information is not correct and require further steps to address.

Need Help??

My office can help you with the annual filing process and with the IRS matching program