Form 1099 is used by the IRS to track taxable income. It is generally prepared by the payer, with the original sent to the IRS and a copy sent to the payee. There are numerous versions of the form, such as 1099-INT for interest paid, 1099-B for stock sales, 1099-C for cancelation of debt, etc. Form 1099-Misc is generally used to report busines transactions. It is prepared and issued by businesses that pay other businesses for rent, services, and certain other transactions. Before any business enters into a service agreement with another business, it is important to determine whether that vendor is subject to the 1099-Misc rules and if so, have the vendor complete Form W-9 to be kept in the payor's files. This form provides the information that will be needed if a 1099-Misc is required after year-end.
Of course, anything dealing with taxes and the IRS can't be as simple as it sounds, and numerous exceptions and subtleties apply. This short survey, under ten questions in all, will help determine whether or not you should be preparing and filing 1099-Misc forms. Businesses that should issue 1099 forms and fail to do so can be subjected to penalties and interest, as well as the possible disallowance of the business deduction in an audit.
We have designed this questionnaire to be as short and painless as possible, but that means there are situations it does not cover. If you think you may have a 1099 filing requirement, please be sure to call us! Ready to start?