Friday, January 28, 2011


Who do you need to send a 1099 to?

The following list covers the majority of circumstances that require businesses to issue a 1099-Misc to an individual or business and the situations where 1099s are not required. Let’s start with a list of excluded transactions.

Excluded transactions include:
  • Most payments to corporations (see exceptions below)
  • Payments for merchandise
  • Payments of rent to real-estate agents or corporations
  • Business travel allowances paid to employees
  • Wages paid to W-2 employees
  • Payments to tax-exempt organizations
1099s are required for:
  • Payment for services in excess of $600 paid during the year
  • Rent payments exceeding $600 paid to individuals or businesses which are not incorporated
  • Any fishing boat proceeds
  • Medical and healthcare payments in excess of $600, including payments to a corporation
  • Cash payments for fish (or other aquatic life) in excess of $600, including payment to a corporation
  • Royalties or broker payments in excess of $10
  • Gross proceeds to an attorney in excess of $600, including any law practices that are incorporated

When are they due?

Copy B and Copy 2 of Form 1099-MISC must be sent to the recipient by February 1st, 2011. The due date is extended to February 16, 2011, if you are reporting payments in boxes 8 or 14. File Copy A of the 1099-MISC with the IRS by March 1st (Extended to March 31st if you file electronically).

What are the penalties for non-compliance?

Failure to furnish correct payee statements can have large consequences. Fines start at $30 per information return if you correctly file within 30 days of the due date; $60 per return if more than 30 days late but before August 1; $100 per return after August 1 or if you don't file. Intentional disregard of the requirements raises the fine to $250 per return.

Additionally, failure to file may also put your deductions at risk.

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