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Form 1099

If you operate as a business, regardless if you file as a corporation, S corporation, partnership, LLC, or Schedule C on an Individual return, you must answer a two part question on the tax return.

The first question is, “did you make any payments that would require you to file Form(s) 1099?” and the second is, “if YES, did you or will you file required Forms 1099?”

The Form 1099 series is used to report various types of income other than wages, salaries, and tips. It encompasses several different forms, but the one filed most frequently by small businesses is the Form 1099-MISC.

If you paid a non-employee at least $600 for work connected with your trade or business, you need to send the income recipient a 1099-MISC. You do not have to report personal payments such as a contractor who paints your home. Also, you don’t have to report payments for merchandise, freight, or storage since they are not “services”. Additionally, you do not have to report payments for services done by corporations.

You do need to send 1099s to sole proprietorships, partnerships, limited liability companies, and attorneys, even if the law firm is a corporation. Rent amounts are reported on the 1099-MISC, unless the landlord is a corporation.

You must provide the form to the recipient no later than January 31st. The government form must be an original, not a copy of the form, and is due by February 28th.

We will be taking a one week break next week. See you again on February 4th.

Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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