It’s time to start preparing 2009 1099 forms. Every year the question arises: Who gets a 1099?
For the complete answer, see: http://www.irs.gov/pub/irs-pdf/i1099msc.pdf
In general, service providers you have paid $600 or more in 2009 need to be issued a 1099. Service providers include: independent contractors, accountants, public relations firms, janitorial services, etc. Payments to service providers are reported in box 7, non-employee compensation. Sales commissions paid to non-employees are also reported in box 7. This does depend on the type of entity you paid:
- Sole proprietors, partnerships, and LLC’s taxed as sole proprietors or partnerships DO get a 1099.
- C Corporations, S Corporations, and LLC’s taxed as C or S Corporations DO NOT need to be issued a 1099.
In addition, payments for rent are issued in box 1 and follow the same corporation/non-corporation rule. Rents paid to real estate agents do not need to be issued on a 1099.
Payments to attorneys are always issued on a 1099 (regardless of corporation/non-corporation status). These payments will either be reported in box 7 as non-employee compensation or box 14, gross proceeds paid to an attorney. See 1099 misc instructions for further information.
If in doubt, issue the 1099. There is nothing wrong with issuing when you didn’t need to to, but you will face penalties if you don’t issue a 1099 when it is required.