December 23, 2016|
As we approach the end of 2016 it is time to start thinking about the preparation of Form 1099-MISC. Preparation requirements are the same as prior years, although the filing deadline has shifted to January 31st (please see Faw Casson’s article on the Filing Deadline Changes for W-2s and 1099-MISC featured in this newsletter).
Most frequently utilized is nonemployee compensation, Box 7 on the form. Nonemployee compensation includes payments of $600 or more that you paid in the course of your business operations to someone who is not your employee for services that would normally be subject to Self Employment tax (not including corporations.) This would include fees for services (like repairs, lawn maintenance, janitorial etc.) attorney’s fees, director fees, cash payments for fish you purchased from commercial fishermen, (fish meaning fish and all other forms of aquatic life, i.e. crabs, lobsters etc). See instructions to Form 1099-MISC for complete listing of items to include. Exclusions include payments for merchandise, utilities, freight, storage and such similar items. Generally, payments made to corporations are excluded, with the exception being legal fees.
Another box frequently utilized is Box 1: Rents. If you pay (other than to a corporation) building, land or equipment rent of $600 or more, you will need to prepare a Form 1099-Misc to report the payments. An exception would be if you are paying building rent to a real estate agent, you would not be required to file.
If you pay loan interest to someone other than a bank or financial institution, remember you will need to prepare a Form 1099-INT for the business loan.
As you prepare your 1099s remember the following: If the recipient is an individual, normally the EIN will be his/her social security number. If the EIN is a federal tax ID number, normally the recipient will be a business name. IRS has a matching procedure and will notify you if the tax ID number and recipient name do not match its records.
As always, if Faw Casson can be of assistance, we are but a phone call away.