When to file 1099 and who needs to file?

End of the Tax Year and it is important to initiate the process of issuing 1099s by accounting for all non-employee compensation and misc. expenses paid. If you are paying any individual more than $600 , you would need to issue a 1099 by end of January 31st.

What are the most common payments that require a 1099 to be issued?

  • Payments of $600 or more for services provided to your business – includes independent contractors, bonuses, fees for professional services (1099-NEC)
  • Payments of $600 or more to an attorney for services, even if they are a corporation (1099-NEC)
  • Payments of $600 or more for rents (of equipment, office space, tools, etc.) (1099-MISC)
  • Payments of $600 or more in interest by non-financial institutions (1099-INT)

NOTE: The $600 threshold is the total of all qualified payments made to that vendor in a year.  

When is a 1099 not required?

  • Payments made to S-Corporations or C-Corporations (unless they are an attorney)
  • Payments made for goods
  • Payments to employees (reported on W-2)
  • Payments from personal funds for personal services (not business expenses)

Recently I spoke to business owners and was surprised to learn that so many of them did not know they needed a W-9 form filled out in order to issue a 1099 at the end of the year.

NOTE: It is BEST practice to get a W9 form BEFORE you pay any individual. (A lot of them don’t answer after they get paid).

When to file 1099 and who needs to file?
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