Okay, business owners, here we go! Your favorite task of the year:  1099s!

What is the dollar limit?

If total payment for the year is $600 or more, issue a 1099.

If total payment for the year is under $600, ignore the 1099.

Who might get a 1099?

Anyone who provided a service for you in 2012.

Here is a list of common services.  The list is not complete. Contact me if you are unsure.

  • Rent (Yes!  Your landlord gets a 1099.)
  • Subcontractor
  • Accountant (me!)
  • Bookkeeper
  • Lawyer
  • Consultant
  • Website designer
  • Graphic artist
  • Janitorial/Cleaning
  • Repair to your business vehicle
  • Repair to your business equipment
  • Repair to your business location

What if the payment includes both labor (which is a service) and parts? (ex:  car repair)

You should send a 1099… but it’s a little complicated.

What if I paid by credit card sometimes and by check other times?

Add it all up together.

Are there exceptions?
Yes.  If the service provider is a corporation, you don’t have to send a 1099.

However, they still have to fill out a W-9 for you, and you have to keep it on file.

Are there exceptions to the exceptions?

Yes.  Even if a lawyer is a corporation, a 1099 is still issued.

How do I get their information for the 1099?

Give them a W-9 and ask them to fill it out. In fact, you should give a W-9 to all new service providers (and not pay them) until they fill it out and sign it.

What if they won’t sign a W-9?

Don’t hire them.  Don’t pay them.

OR

If you do, you will need to withhold $$ and remit the withholding to the government.

Talk about fun!

Withholding?!

Sad but true.

If a service provider does not provide the signed W-9, you are supposed to withhold taxes before you pay them.  And if you don’t withhold…well, the penalties are more complicated than the rules.

What if they just tell me they are a corporation over the phone?

Not good enough.  You need their signed W-9 in your file.

What if they just tell me their number over the phone?

Not good enough.  You need their signed W-9 in your file.

What if I don’t have their W-9 information?

Let’s hope you withheld.

Where do I get that dratted W-9 form?

Do a web search on the internet.

Seriously!  Just put   W9   in your browser.

You will get a fillable pdf.

How do I get those abominable 1099 forms?

You can NOT download them from the internet!

Go to an office supply store and buy them.

(Lakes Office Supply in Medford sells single sheets.)

OR

Plan in advance and order them from the IRS in September.

(Our local S Jersey IRS office will not carry them any longer, effective Jan 2016.)

OR

Use an online service.  Do an internet search to find them.

Anything else?

Don’t forget your “cover sheet” which is called 1096.

Also unavailable from the internet, but usually comes with the package from the store.

What’s the deadline?

To the subcontractor:  January 31

To the government:  February 28 – by paper

To the government:  March 31 – electronically (I can file electronically.)

What if I don’t have time to do all this paperwork?

Give us a call.  We can help.