It is time to gather your papers to file your form 1099! If your business has made payments of over $600 to any vendor throughout the year, now is the perfect time to begin collecting and assembling the information needed to file your annual 1099 forms.

What is a Form 1099?

A Form 1099 is typically filed to report annual payment of more than $600 to some person or entity, especially if the payment is expected to be reported as an expense. The form is issued to put the payee on notice that they need to report the payment as income. You are required by federal law to issue Form 1099 using the following guidelines:

• Payments of $600 or more for services (including payment for parts and materials) rendered to your business by any nonemployee individual or unincorporated business.
• Payments for fees in any amount paid to any attorney (regardless of whether they are incorporated or not) that you make in the course of your trade or business.
• Payments by your business for rents to unincorporated landlords, prizes and awards to nonemployees, and fees to a physician, physician’s corporation, or other supplier of health and medical services.  All payments to incorporated veterinarians must be reported in Box 6.
• You are NOT required to report payments to incorporated businesses. An LLC may or may not be considered to be incorporated for tax purposes.  Form W-9, completed by the vendor, is required to make the clarification.
• Payments of $10 or more for royalties.

Most often payments reported on a 1099 are for services, rents, prizes, awards, and interest. However, since this is the tax code, there are always exceptions to the rule. Common exceptions include legal fees paid to attorneys, payments to for-profit medical corporations, and fishing related payments.

If you are unclear about the rules, it is best to consult with one of our qualified tax professionals for assistance

Where to Start: Form W-9

The most important form a business needs to have on file for all non-corporate vendors is a Form W-9. This form collects the following information on the vendor, which is used to prepare a proper Form 1099:

• Correct legal name
• Address
• Type of entity
• Tax ID number

Best Practice Tip: Always obtain a Form W-9 from vendors prior to making any payment. This will help avoid issues and complications that may arise while trying to collect information after the fact and at the end of the year when deadlines are approaching.

Filing Your Form 1099

In order for our office to prepare your Forms 1096 and 1099-Annual Information Returns in a timely manner we will need the information listed below delivered no later than January 12, 2018.  If the information is not received by this time we cannot guarantee that your returns will be prepared and electronically filed with the IRS by the deadline of January 31, 2018.  All 1099 recipient copies are to be delivered or postmarked on or before January 31, 2018.

To avoid IRS penalties for incorrectly filed returns, you are required to keep a copy of all Form W9s for all vendors on file.  Be advised that the Nebraska Department of Labor requires the taxpayer to have verification on file of any contactor who is not an employee in the form of invoices or other written contract between both parties.

HBE LLP provides Form 1099 filing services for all types of businesses and individuals that may need assistance with this process. If you need help, or if you have any questions about Form 1099 requirements or exceptions, please contact our office at 402.423.4343. Our team of experts is available to assist you with all your tax and accounting needs.