I don’t know about you, but the end of the year always gets
here before I’m ready for it. And whether we’re ready or not, it will be here
anyway, so I try to prepare in December, if not sooner, so I at least have a
chance at starting 2012 at an advantage.
1099’s are often overlooked until year end, but the sooner
we prepare for them the easier they are to get done once January gets here. The 2011 Schedule C (Profit or Loss from
Business for sole proprietors) now has a line item asking: “Did you make any
payments in 2011 that would require you to file Form 1099?” While it has always
been a requirement to file 1099’s, now the question is being asked on your tax
return, and if you answer Yes, the next question is: “Did you or will you file
all required Forms 1099?”
If you answered yes to the first part the only answer that
works here is Yes. Of course, that means you have to actually have done it, or
will do it, or have me do it, or whatever works for you. Otherwise you’re just
asking for trouble. There’s a penalty for each 1099 not filed, and last time I
checked it was $50 per occurrence.
Whether you’re a sole proprietor, a corporation, an LLC, or
a partnership, you’re required to file 1099’s.
Amounts to Report
$600 or more, unless it’s for royalties, which is $10 or
more.
Who gets a 1099?
The following are the biggest categories to be aware of:
- Nonemployee compensation (subcontractors), unless they’re incorporated
- Rental income (yes, you must send your landlord a 1099)
- Mileage, nonemployee
- Auto reimbursements, nonemployee
- Attorney fees and gross proceeds (any amount)
- Car expenses, nonemployee
There are more but those are the major ones that might apply
to you.
When to Report
1099’s are due to the IRS by February 28th, and
to the recipients by January 31st.
If you’ve paid someone more than $600 this year, you’ll want
to make sure they’ve provided a W-9 to you, or have provided their EIN. If you’ve
paid more than $600 and don’t have a W-9 yet, get it before the end of the year
so you’re ready.
If they refuse to provide a W-9, give them no more payments.
And in the future, don’t pay anyone without getting a W-9 first, just in case,
even if you don’t anticipate paying them more than $600 in a year.
If you’ve made payments and are unable to get the EIN info
from the payee, give me a call. I’ll tell you the best way to handle it.
Here’s a link to the W-9 form: http://www.irs.gov/pub/irs-pdf/fw9.pdf
