1099’s have proven to be a point of confusion for many clients, so we’ve compiled a list of all the people you need to send a 1099 as a point of reference. Feel free to use this blog as a reference as your prepare to send these out in just a few short months.
1099-MISC is for:
- Someone who received at least $10 in royalties, dividends or tax exempt interest.
- A royalty is a payment to the legal owner of the copyrighted work or franchise from the person who is using it for revenue. For example, a book being sold in a bookstore.
- A dividend is a (usually quarterly) payment from a company to its respective shareholders.
- Someone who reports direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
- Any person you have withheld any federal income tax under the backup withholding rules regardless of amount of payment.
- Any person who has received at least $600 in the following:
- Rents (both of space and equipment)
- Services performed by someone NOT your employee (including parts & materials)
- Prizes & awards
- Other income payments
- Medical and health care payments
- 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
- Fishing boat proceeds
1099-MISC is NOT for:
- Payments to a corporation including an LLC that is treated as a C or S (unless it is an attorney, attorneys are the ONLY ones that must have a 1099 regardless of the entity type)
- Payments for merchandise, telegrams, telephone, freight, storage & similar items
- Rental payments to real estate agents BUT the real estate agent must use report the rent paid over to the property owner
- Items reportable on Form W-2
- Compensation for injuries or sickness by the department of justice as a public safety officer disability or survivor’s benefit
- Compensation for wrongful incarceration for any criminal offense
Knowing who receives a 1099 and who doesn’t will make your tax life significantly easier. If you have more specific questions or situations and need clarification, we would love to assist you. Head over to our Contact Us page and fill out our form.