Santa’s 1099s

It’s that time of year again. Sweaters zipped up, logs on the fire, shoppers in the stores and your list of things to do to get ready for tax season.

Hopefully, you’ve had a great year. Sometimes, that means you needed a bit more help. Even Santa needed an extra hand preparing the gifts the elves couldn’t get finished. If you hired contractors, consultants or others, you may be wondering to whom you must issue 1099s.

Here are the criteria:

  • Anyone who is paid more than $600 is the typical answer, but it’s not the only stipulation.
  • 1099’s are cash basis – it is based on payments made, not bills received
  • If people are paid exactly $600, they must be issued a 1099. If they are paid $599.99, then they do NOT need a 1099.
  • If the total of all payments for 2014 is $600 or greater, you must issue a 1099. For example, if payment 1 in March is $200, payment 2 in September is $350 and payment 3 in December is $150, the total is $700 and the vendor must be issued at 1099.
  • If the payee is incorporated – their business name ends with has an “inc” – then the payee DOES NOT need to be issued a 1099:
    • For instance, you do not need to issue 1099s to Verizon or AT&T because they are incorporated.
    • Fourlane is incorporated, so you do not need to issue us a 1099.
    • If the taxpayer is a corporation and pays non-corporations (such as independent contractors), then you MUST issue them 1099s.
  • Lawyers must be issued 1099s, no matter how much they were paid for legal services. It does not matter if they are a corporation or if they are under the $600 threshold.

Failure to file by Jan. 31, 2015 could lead to IRS penalties.

Fourlane is happy to help you identify which vendors you need to submit 1099s to, based on your QuickBooks file, and e-File them on your behalf. We can also help you obtain W9s from vendors.

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