1099 Filing Requirements
A Form 1099-MISC is used to report payments for services provided to your business, farm, or rental activity by unincorporated vendors when those payments total $600 or more for the year. The IRS has established four conditions for payments that must be reported using Form 1099-MISC. All of the following four conditions must be met:
(1) The payment must be made to a nonemployee.
(2) The payment must be made for services provided to the business, farm, or rental activity.
(3) The payment was to a non-corporation (e.g., individual, partnership, LLC).
(4) The payment or payments totaled $600 or more for the year.
Payments made using a credit or debit card are exempt from the Form 1099-MISC requirements.
Please note that an individual who pays for a personal service (lawn care for home, house cleaning, sitters) is not required to file a 1099-MISC since the individual did not pay for the service in the course of a business, farm, or rental activity. However, special rules (W2s, payroll taxes, etc.) apply if you qualify as a household employer.
In order to properly prepare Form 1099-MISC you will need the following required information:
*SS# or EIN
*Total amount paid to the payee for the year
*Type of expenditure (generally Rents or Nonemployee compensation)
The best way to obtain the necessary information from the payee is to have the payee fill out a Form W-9 before you pay them for services or rent, even if you are unsure if you will meet the $600 threshold amount by the end of the year. Form W-9 can also be obtained online at irs.gov or by contacting our office.
Contact our office in early January with the required Form 1099 information above and we will prepare and mail the payee copies and file all required information to the IRS and Alabama.
Don’t pay a dime without getting a signed Form W-9!