Update: Beginning in 2012, taxpayers will be required to report payments made to corporations and payments made in exchange for merchandise. We will not, however, be required to report payments made via credit or debit card.
If you make payments in excess of $600 to a person or a business over the course of a year, you must file Form 1099 to report those payments. One copy of the form is sent to the IRS, and another copy is sent to the person to whom you made the payments.
Exceptions:
- Payments made to corporations are generally not required to be reported via Form 1099.
- Payments in exchange for merchandise are not required to be reported via Form 1099.
- Payments made to tax-exempt organizations and payments made to a government (state, city, or Federal) are not required to be reported via Form 1099.
1099s must be filed by January 31 of the following year. For example, payments made during 2010 would be reported by January 31, 2011.
Of course, it’s perfectly acceptable to file a Form 1099 even if payments made were less than $600. (In order to simplify their processes, many businesses simply send 1099s to everybody to whom they made payments, regardless of amount.)
Payments to Employees
Wage payments made to employees are not reported on Form 1099. They are reported on Form W-2.
As such, if you receive a 1099 at the end of the year reporting your income from your job, you know that you’re being classified as an independent contractor (as opposed to being classified as an employee) for the work that you’re doing.
For More Information, See My Related Book:
 |
LLC vs. S-Corp vs. C-Corp Explained in 100 Pages or Less
|
- The basics of sole proprietorship, partnership, LLC, S-Corp, and C-Corp taxation,
- How to protect your personal assets from lawsuits against your business,
- Which business structures could reduce your Federal income tax or Self-Employment tax,
- Click here to see the full list.
Comments on this entry are closed.