Q. What is a 1099-MISC form?
A. A "1099" form is a general form that reports income earned by a sole proprietor or partnership.
Q. How do I know if I need to issue a 1099?
A. If you paid an individual or partnership over $600 in the prior year, you usually must issue them a 1099 form.
If the following four conditions are met, you must generally report a payment as non-employee compensation.
1. You made the payment to someone who is not your employee;
2. You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
3. You made the payment to an individual, partnership, estate, or in some cases, a corporation; and
4. You made payments to the payee of at least $600 during the year.
Payments made to corporations, for merchandise, or for rent do not need to be filed on a 1099-MISC. This information return must be filed with the IRS, and corresponding statements must be sent to each payee no later than January 31st, 2017.
Q. Can I file and send out my own 1099's?
A. Yes, you can fill out and mail or e-mail 1099's to your vendors, however to report to the IRS requires a special red 1096 form. This form must be requested from the IRS or purchased from a store/online. You cannot simply print out a 1096 form and mail it to the IRS.
Q. Can Adams Accounting assist with preparing, filing, and sending form 1099 to the IRS and recipients?
A. Yes, You can send me completed W-9 forms and the amount paid and I will be happy to assist you in the e-filing of your 1099-MISC forms, 1096 form to the IRS, as well as mail or e-mail the recipient copies.
Q. What is a W-9, and what if I don't have one?
A. If you haven't yet requested form W- 9s from your vendors, contractors and other payment recipients, you should do so immediately. The W-9 will provide you with the legal name, address and taxpayer identification number for the vendor, which is the information you will need when preparing any 1099-MISC forms. You can find an online fill-able PDF here: www.irs.gov/pub/irs-pdf/fw9.pdf
Q. What if I don't know how much I paid my vendors?
A. Please review your accounting system this week and determine which vendors qualify for 1099-MISC reporting and which vendors need to be contacted for a form W-9. Please contact me if you are not sure how to run this report. Take your time and don't rush this, it is very important for proper filing.
Q. What are the penalties?
A. For unreported or incorrect 1099-MISC’s, the penalty is $30-$100 for each form.
Q. What if a company or a person won’t give me a W-9?
A. If you don’t have a Social Security Number or Tax ID number, you can't take the expense without reporting the income to the vendor. If someone won’t fill out a W-9, you may need to rethink doing business with them.