A 1099-MISC form is used to file information on compensation paid to various individuals and entities in the previous calendar year. This form is NOT to be used for wages and salaries paid to employees.
1099s are to be mailed to your vendors and sub-contractors, post-marked by January 31st each year.
The IRS portion of the 1099-MISC must be sent to the IRS by February 28th. each year.
2011 follows the existing guidelines for the 1099-MISC, which have existed for quite sometime. Those being:
The Internal Revenue Service (IRS) requires businesses (including not-for-profit organizations) to issue a Form 1099 to any individual or unincorporated business paid in excess of $600 per calendar year for services rendered. This is required whether these payments are spread out over the course of the year or are paid in one lump sum payment. This form is generally not required to be issued to incorporated businesses. The only exception is when payments are made to incorporated law firms. A 1099 must be issued whenever payments in excess of $600 per calendar year are made to law firms.
2012 starts a new set of rules regarding 1099s. Stay tuned… We will discuss those more in future posts.
TIP: The most effective way to obtain the information needed to prepare the Form 1099 is by requiring that an IRS Form W-9 be completed prior to any payment being made. Click here for the current W-9 form!
So… what do you do now?? Ask your accounting professional for assistance in filing the 2011 1099s… and begin requesting a W-9 for all vendors and sub-contractors, regardless of the type of business or the dollar amount paid to them. This will put you a step ahead as you learn the new IRS requirements for this year.