As business owners, we are required to file 1099 forms for vendors we’ve paid if the purchases and those who have been paid fall into certain categories. These forms are due to the recipient by January 31, and to the IRS by February 28 (if filing paper documents) and March 31 if e-filing.
According to the IRS instructions, file Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:
- At least $600 in rents, services (including parts and materials), 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, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
- Any fishing boat proceeds; or
- Gross proceeds of $600 or more paid to an attorney.
There are exceptions to these rules:
- Generally, payments to a corporation. But see below for reportable payments.
- Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
- Payments of rent to real estate agents.
- Payments to a tax-exempt organization including tax-exempt trusts
- Payments made with a credit card
The following payments made to corporations generally must be reported on Form 1099-MISC.
- Medical and health care payments reported in box 6.
- Fish purchases for cash reported in box 7.
- Attorneys’ fees reported in box 7.
- Gross proceeds paid to an attorney reported in box 14.
- Payments to corporations for legal services.
The exemption from reporting payments made to corporations does not apply to payments for legal services. Therefore, you must report attorneys’ fees (in box 7) or gross proceeds (in box 14) as described earlier to corporations that provide legal services.
For information on how to properly fill out the 1099 forms, click here.