Generally, a trade or business must report payments on Form 1099-MISC if:
- The aggregate exceeds $600
- Not reported on Form W-2
- Made to a person or partnership
Examples of payments are as follows:
- Rents reported in box 1
- Services performed by someone other than your employee reported in box 7
- Other income reported in box 3
- Payments to an attorney in course of trade or business reported in box 7. Gross proceeds paid to an attorney in connection with a settlement agreement are reported in box 14
- Medical payments reported in box 6
- Directors fees reported in box 7
- Wages paid to a deceased employee in the year following death reported in box 3
Form 1099-MISC must be filed for each person from whom federal income tax has been withheld under the federal backup withholding rules. Personal payments are not reportable on Form 1099. Nonprofit organizations are considered to be engaged in a trade or business and are subject to the 1099 reporting requirements. Payments to LLCs treated as partnerships are required to file 1099s.
Examples of payments which are exempt from reporting requirement are as follows:
- Generally, payments to corporations (including limited liability companies who are treated as either a C or S corporation for federal income tax purposes) are not reported. However, payments made to corporations for attorney fees, substitute payments in lieu of dividends or tax-exempt interest and for medical and health care services are not exempt from the reporting requirements. Payments made to a tax-exempt hospital are not reported.
- Payments for merchandise, telephone, freight and similar items
- Business travel allowances paid to employees
- Payments made to tax-exempt organizations
- Payments made with a credit card or payment card must be reported on Form 1099-K by the payment settlement entity and are not subject to Form 1099-MISC reporting
- Cancelled debt.
Paper filed Form 1099-MISC must be filed with IRS by March 2, 2015. Electronically filed forms are due March 31, 2015. Forms must be provided to recipients by February 2, 2015. General instructions can be found here.
IRS forms include questions asking if the trade or business made payments in 2014 which will require filing form 1099-MISC, and if so, will the required forms be filed. These questions are on Form 1040 Schedules C, F and E. These questions are also on Forms 1120, 112S and 1065. All taxpayers engaged in a trade or business filing these schedules or forms must provide answers to these questions to their paid tax preparer to insure the returns can be prepared accurately.