An Evaluation on 1099 Filings

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An Evaluation on 1099 Filings:

When a financial yearend is closed, the entity should make sure 1099s filing is scheduled and required information is available. It is time to work on 1099 filings, refer below information regarding 1099 filings.

Filing Deadline:

January 31st

Who is liable for filing 1099:

Any legal entity doing a business or a trade including government agencies and non-profit organizations.

Qualified payments for 1099 filings:

Qualified payments can be evaluated under 2 categories,

  1. Amount
  2. Type

Amount

  • Amount – $600 or more

          All type of Services including Rent Payments

  • Amount – $10 or more

          Royalties

Type

Payments made to Corporations are not under 1099 Payments, however, there are two exceptions. Payments made against Medical and Attorney Corporations are Liable for 1099 Filings. So payments made against below entities are under 1099 payments.

  • Individuals and Partnerships
  • Estates and Trusts
  • Medical and Attorney Corporations

Disqualified Payments for 1099 filings:

Qualified payments can be evaluated under 2 categories,

  1. Amount
  2. Type

Amount

  • All payments below $600 except Royalties

Type

  • Corporations except for Medical and Attorney
  • Government and Rental agencies

General Examples for 1099 Payments

  • Professional Services (Legal, Accounting, Attorney and other Contractor payments)
  • Construction Services
  • Medical Services (Doctors, Dentists, Ambulance, Laboratory Services, Therapists)
  • Advertising Services
  • Auto Repair Services
  • Consultants
  • Office Rents and Parking  

The most difficult part is identifying Qualified 1099 Vendor Payments and Vendor Records. In any kind of accounting system, it is better to identify the 1099 vendor upfront (at the time of creating vendor record ) and update relevant vendor profile information required for 1099 filings.

We need below Vendor profile information for 1099 filings:

  • Legal Name
  • TIN Number
  • Email Address and Legal Address

In order to collect the above information from vendors typically organization use W9 form and send it to the Vendor and get it completed. So at the time of filings accounting system has the required information and filing process is a very simple task compared to other types of tax filings. Also, most of the accounting systems facilitate 1099 filings directly through the system and it much easier than the manual filings.

References: 

  1. IRS Instructions for Forms 1099-MISC and 1099-NEC

    https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

  2. W9 Form

    https://www.irs.gov/pub/irs-pdf/fw9.pdf

 

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