1099 filing requirements apply to “Miscellaneous Income” form which is used by businesses to report the payments to the IRS defined non-employees. Filling the form is quite easy and simple. The problem is to determine whom to send it to and when because of several types of payments like prizes, awards, royalties, rents and more. The form -1099 MISC does not cover employee wages and salaries. Also, it is required to be submitted for the non-employees to whom a sum exceeding $600 is paid in a calendar year and for the previous calendar year.
Businesses must send these forms to all the concerned payees by 01 February and companies must file their 1099s latest by 29th February if by paper and 31st March if filed electronically.
You can compile the information from your books of accounts by going through the payments made to persons or business for their service. The entries will be made for “Professional fees” or “other payments”. Keeping track of payments separately for each vendor will make it easy to compile and know the total amount paid to them during a calendar year.
Taxpayer ID of Payees
Before preparing the 1099-MISC form you need to have the valid tax ID number of that person or entity to whom payments have been made by you. By collecting the W-9 form from the payee you will get the name, address and the taxpayer ID which they have provided.
Missing W-9 Form
Sometimes it may so happen that the person does not fill and submit the W-9 form to you.
You must document your efforts to obtain the W-9 form from them. You can keep track of the attempts made to collect W-9 form by mailings and emails. This will save you from the imposition of fines and penalties by the IRS.
File the 1099-MISC form on time and enter zeroes in the space provided for the taxpayer’s ID.
Information needs to fill the 1099-MISC form.
You need to furnish the following business information pertaining to you.
- Business Name
- Business Address
- Federal Employer ID Number
The taxpayer ID of the recipient is required which is recipient’s Federal EIN or Social Security Number.
Entering the Amount Paid
There are several boxes serially numbered for entering the amounts as follows
Box No 1 – Amounts paid by you towards rents (Does not apply to payments made to Corporation)
Box No 2– Royalties from mineral properties, oil or gas. It could be from Intellectual properties like copyrights, trademarks, patents etc.
Box No 3– Other income payments which may include prizes, awards including sweepstakes payments. Payment made to participants of a research study and punitive damages.
Box No 6 – Payments towards Medical and healthcare. These include all payments made to physicians or other persons providing medical or healthcare services. You must also include the payments made by insurers under health, sickness and accident insurance.
Box No. 7 – Services performed by non-employee
Box No 9 – Direct sales of consumer products for resale amounting to $5000 or more.
Box No 14 – Gross proceeds paid to an attorney.
The filling of form 1099-MISC is quite simple by following the instructions. The confusion may occur in determining to whom this form is to be given and segregation of payments to non-employees. Filing of the 1099 form requirements must be done on time to avoid fines and penalties from IRS.