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Forms 1099

Every year I get a lot of questions about Forms 1099. It is a very important topic that I would like to address again.

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 to a contractor who paints your home, nor do you report payments for merchandise, freight or storage, since they are not “services”. You also do not have to report payments for services done by corporations, but you do need to send 1099s to sole proprietorships, partnership, limited liability companies and to attorneys, even if the law firm is a corporation. Amounts paid for rent are reported on the 1099-MISC, unless the landlord is a corporation.

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

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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