W-9 Forms & 1099 Reporting

1099 Reporting

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Who Must File 1099's?   

Persons engaged in a trade or business must file Form 1099-MISC when certain payments are made. A person is considered to be engaged in business if he or she operates for profit; thus, personal payments aren’t reportable.

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Payments to Report

A Form 1099-MISC must be filed for each person to whom payment is made of:

• $600 or more for services performed for a trade or business by people not treated as employees;

• Backup withholding (all amounts);

• Rent or prizes and awards that are not for service ($600 or more) and royalties ($10 or more);

• All payments to crew members by owners or operators of fishing boats;

• Payments of $600 or more to a supplier of health and medical services; and

• Crop insurance proceeds

Payments made to corporations, except those made for medical or health care services and attorney fees, are not required to be reported on Form 1099-MISC

 see examples of payments that should be reported on Form 1099

Non-Employee Payments

Non-employee payments are reported in Box 7 of Form Form 1099-MISC. Non-employee payments include fees, commissions, prizes and awards, and other forms of compensation provided for services performed for a trade or business by an individual who is not an employee.

If the following four conditions are met, a payment generally is reportable as non-employee compensation:​

• The taxpayer made the payment to someone who is not an employee;

• The payment was made for services in the course of a trade or business;

• The payment was made to someone other than a corporation; and

• Payments of at least $600 were made to the payee during the year

Payments for Services

When a business pays an independent contractor for services performed in the course of that business, the service recipient must file Form 1099-MISC if the payment is $600 or more for the year, unless the provider is a Corporation.

Direct Sales

The law requires information reporting on Form 1099-MISC for certain direct sellers. This requirement applies to persons who, in the course of a business, sell consumer products on a buy/sell basis, deposit/commission basis, or any similar basis to any buyer who (1) sells such product in a home or other than in a store or (2) sells these products to another seller. Sales of $5,000 or more are reportable.

Deceased Employee Wages

If an employee dies during the year, the employer must report the accrued wages, annual leave pay, and other compensation paid to an estate or beneficiary after death on Form 1099-MISC; this applies whether the payment is made in the year of death or after the year of death.

Rents

(except rent paid to real estate agents & brokers)

The law requires information reporting for rent payments made for real or other property rental.

Real Estate Agents & Brokers

Real estate agents must report on Form 1099-MISC rents collected for property owners before deduction of commissions, fees, or other expenses if the amount paid to any one property owner totals $600 or more during the calendar year.

 Do not report payments made by a credit card, PayPal, gift card or other payment constituting an electronic payment

W-9 Forms

Form W-9 Requirements:     

In accordance with federal Internal Revenue Service regulations, small business owners are required to obtain Form W-9 “Request for Taxpayer Identification Number and Certification” from any vendor to whom it makes payments that (may) require the issuance of a Form 1099.

 Examples of payments that should be reported on Form 1099

Because you cannot accept the person's information informally, Form W-9 is used to request a vendor's information. On Form W-9, the vendor identifies the type of organization and provides the legal name and matching taxpayer identification number. Vendors that refuse to provide this information are subject to backup withholding, and your business can be penalized for not withholding the required amount.

If your business is audited,

you will need to be able to provide a W-9 form for everyone who did work for you.

Unless your CPA has been specifically engaged to provide this service, it is the responsibility of the business owner to collect, and retain, this information.

also see

Form 1099 Reporting Penalties

 Payments that should be reported on Form 1099

Employee or Subcontractor?