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Who has to Send in Form 1099-MISC?

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At Christianson, we want to ensure that you are protected from liabilities with the IRS by giving you all the information you need to run your business in a legal and efficient manner. We want to help your business succeed! Today’s tip is in relation to Form 1099-MISC and who is required to submit the form to the IRS.

If, as part of your trade or business, you made any of the following types of payments of $600 or more to an unincorporated independent contractor, you will need to file Form 1099-MISC.

  • Services performed (Box 7)
    • Professional fees paid to attorneys, accountants, engineers, directors, speakers, etc
      • Attorneys receive a Form 1099-MISC even if they are incorporated
    • Installation services
    • Landscaping services
      • Lawn mowing
      • Snow removal
    • Marketing services
    • Board Compensation
    • Other services
    • Commissions
  • Prizes and awards (Box 3)
  • Rents (Box 1)
  • Royalties (Box 2)
  • Backup withholding or federal income tax withheld (Box 4)
  • To physicians, physicians’ corporation or other supplier of health and medical services including veterinarians (Box 6)
  • Crop insurance proceeds (Box 10)
  • Gross proceeds of $600 or more paid to an attorney (Box 14)

What is the Risk if I don’t Send the Form?

The business owner is required to send a copy of Form 1099-MISC to the contractor and to the IRS by January 31st.  Penalties for not filing the 1099-MISC forms are $50-$260 per failure to file per form.  Each form will have two failures to file – the failure to send the form to the contractor and the failure to send the form to the IRS.

How Do I Fill Out the Form 1099-MISC?

To fill out a Form 1099-MISC, you need the contractor’s name, address and taxpayer identification number.  If the contractor is a sole proprietor or a single member LLC who uses a business name, you must list the name of the owner.  You can include the name of the business on a separate line, but the owner’s name must be included on the first line.  For the taxpayer identification number, you will use the owner’s Social Security number. For more details on filling out the Form 1099-MISC, please look here.

Note: if you are not engaged in a trade or business and you operate for a gain or profit, you are not required to issue 1099s for payments if those payments are made for personal purposes.

It’s hard to be an expert in everything, but you know your business. Let us help you help your business succeed. Contact Christianson today!

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