Good Morning Gentle Readers,
You'd think after twenty five years I'd not be surprised when an independent contractor or independent business calls up one of my clients and says, where's my 1099?
This happens frequently about this time of year. Many businesses, including some of my clients, don't send 1099's at all. Or they don't send 1099's to every single entity or individual that is supposed to get one. Or the thing gets lost in the mail.
Frankly, it baffles me that anyone would want information sent to the government by a third party. Less is always more in this respect and every piece of information in the hands of the IRS increases your chance of hearing from those guys, something that rarely goes well.
Besides which, you, Ms Taxpayer are required by law to keep track of your income and properly report it on your income tax return. This is irrespective of whether *OR NOT* you receive a 1099 from the person or business who paid you for services rendered.
General Rules For 1099 Reporting
IRS requires a 1099 (ten ninety-nine) to be issued to any individual, partnership, or other unincorporated entity to whom you make payments of 600.00 or more in any calendar year. This does not mean a $600.00 payment it means a cumulative total of $600.00 or more during the year.
All payments to corporations are exempt from reporting requirements (except certain medical payments). Save yourself some trouble and don't bother with these.
IRS is primarily concerned with individuals who are not actual companies. Most of us think of these people as independent contractors. However, the law requires 1099 reports for all unincorporated entities (sole-proprietorships, partnerships, etc). The fines for non-compliance are minimal and not often assessed.
A common misconception is that IRS can disallow a deduction for a legitimate business expense simply because a 1099 was not properly issued. This is not true.
We suggest that, at an absolute minimum, you file a 1099 for any individual that could be considered an independent contractor. This would include outside consultants as well as employee-like workers who are hired to do specific jobs but are not legally considered employees.
Can we help you with 1099 preparation? Yes. However, the due dates have passed
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