New 1099 Question on Entity Returns
Posted on 01.23.12
Author: Kay Gotshall, CPA
While there has been no change in the requirement of what or when to report, but there has been slight changes and increased disclosures on income tax return filings related to Forms 1099. There are new questions asking specifically if a taxpayer has filed any necessary Forms 1099.
As a best practice, Keiter recommends that if payments were made by your company, the Forms 1099 have been filed. If you need any assistance in determining if a form 1099 is required and/or need assistance in preparing such forms, please contact your Keiter Tax Team. We thought you might find some general information about the more common form 1099s that are required helpful in making a determination.
- Every entity must file Form(s) 1099-MISC if, in the course of its trade or business, it makes payments of rents, services, commissions, or other fixed or determinable income totaling $600 or more to any one person during the calendar year and any payments of $600 or more paid to an attorney. Please note that a Form 1099-MISC is not required to be filed if it meets any of the following exceptions:
- Generally, payments made to a corporation
- Payments for merchandise, telephone, freight, and similar items
- Payments of rent to real estate agents
- Wages paid to employees
- Military differential wages payments made to employees while they are on active duty in the uniformed services
- Business travel allowances paid to employees
- Cost of current life insurance protection, payments to tax-exempt trusts
- Certain payment card transactions if the payment card organization has assigned a merchant/payee a Merchant Category Code (MCC) indicating that reporting is not required. The exemption from reporting payments made to corporations does not apply to payments for legal services. Therefore, you must report attorneys’ fees (in box 7) or gross proceeds (in box 14) as described above to corporations that provide legal services.
- Unless you are a bank, interest of $600 or more paid in the course of your trade or business is reportable
- Payments of dividends are reported to non S corporation shareholders. If you make a payment that may be a dividend but you are unable to determine whether any part of the payment is a dividend by the time you must file Form 1099-DIV, the entire payment must be reported as a dividend.
Again, please let us know as soon as possible if you need assistance with the 1099 reporting requirements. The forms are required to be provided to the recipient on or before January 31, 2012.