Saturday January 25, 2020
1099s – Know When To Get One And Give One
During the year if you pay someone $600.00 for a service by check or bank draft, request a W9 from them. If they are not Incorporated or Scorp, then you will need to send them a 1099. The 1099 form must be mailed to the vendor and efiled with the IRS by January 31. Examples: bookkeeper, website designer, lawyer, tax accountant, janitorial, electrician, IT, virtual assistant, snow removal, welder, fishing crew, business coach, photographer, book editor, social media advisor, consultant, transaction coordinator, etc. If you provide a service then you need to give your clients/customers a W9 and they should be sending you a 1099. If paid by credit card, you do not include that in a 1099. Credit card companies are required to file that information to the IRS. Venmo, Zelle, and PayPal have become a popular choice for entrepreneurs to pay subcontractors. If the payment ultimately comes out of your checking account or the balance of said app, then those are included in your 1099 total to that vendor.
File Form 1099-Misc for each person to whom you have paid during the year:
- at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest;
- at least $600 in:
- services performed by someone who is not your employee;
- prizes and awards;
- other income payments;
- medical and health care payments;
- crop insurance proceeds;
- cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish;
- generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
- payments to an attorney; or
- any fishing boat proceeds,
In addition, use this form to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail.
You can find a W9 form at www.irs.gov or request one from your bookkeeper.