Apart from the typical non-employee, individual whom you consider a subcontractor, are you aware of everyone who is in need of a 1099-Misc come January 31st of the subsequent year? The best practice you can do for yourself (and your accountant!) is to keep up with your W-9 collections throughout the year.
A few basic reminders:
- 1099s are due to vendors paid in total of $600 or more in the calendar year for services
- If a vendor is incorporated or tax-exempt, no 1099 is provided. Except for Lawyers! All legal fees of $600 or more are to be reported on a 1099, despite incorporation status. If you are unsure of a vendor’s legal structure – request a W-9 to be sure
- Common reportable payments
- Rental Fees (including banquet rooms, building space, etc.)
- Copyright, license and royalty fees
- Compensation for personal and/or professional “services” (including parts & materials used in performing services)
- Payments to the beneficiary of a deceased employee
- Legal services
- Merchandise that is custom-made
- Advertising (where the ads are created by the vendor)
Can we get some exceptions here?
- Pay vendors by credit card – credit card revenues are already reported to the IRS on form 1099-K by the credit card company so payments to vendors via credit card are non-reportable on form 1099 by you!
- Foreign vendors – you do not need to provide 1099s to foreign vendors, however, best practice would involve having them fill out a W-8BEN for your records
If you are planning on taking on your 1099 preparation yourself – contact Samantha Wolf at email@example.com for a one-page cheat sheet! If you would like Stephano Slack to handle your 1099 preparation, please contact Samantha Wolf no later than December 1st, 2017!
Samantha Wolf, CPA