Taxpayer asks:
I am an accounts payable clerk for a manufacturing company. Who should we be sending 1099 forms to? What would happen if we sent a 1099 to someone in error?
Taxgirl says:
There are lots of forms 1099. Here’s a quick rundown of some of the most popular:
If your company pays out dividends, capital gains or interest of $10 or more, you would issue a 1099-INT or 1099-DIV.
Barter transactions, which are increasingly popular, are when you perform services or exchange goods rather than actual money. If you engaged in barter throughout the year, you would issue a form 1099-B.
If you issue a cancellation of debt when you are “organization having a significant trade or business of lending money” (probably not applicable to you), then you would issue a form 1099-C.
Pension plans and other retirement plans are reported on a form 1099-R.
The “biggie” is a form 1099-MISC. You generally issue a 1099-MISC when one of the following applies:
* Rent or royalty payments that are $10 or more; prizes or awards that are not for services, such as winnings on TV or radio shows that are $600 or more.
* Payments to crew-members by owners or operators of fishing boats including payments of proceed from sale of catch.
* Payments to a physician, physician’s corporation, or other supplier of health or medical services for $600 or more. These are issued mainly by medical assistance programs or health and accident insurance plans.
* Fish purchases of more than $600 paid in cash for resale.
* Substitute dividend and tax-exempt interest payments reportable by brokers of $10 or more
* Crop Insurance proceeds of $600 or more
* Gross Proceeds paid to attorneys
* Compensation to non-employees of $600 or more. This is generally payable to individuals or partnerships – not corporations. If, for example, you’ve farmed out typing or accounting work to an individual or partnership, you would issue a 1099 if the amount paid out during the year totaled $600 or more.
Here’s my rule, even though it may not be popular. If you’re not sure whether to issue the 1099, do it. The IRS may penalize you for not issuing a 1099 when you should have done so but there’s no real downside to issuing a 1099 when you should not have done so – that’s why, for example, you will often receive a 1099-INT for $3.53 when the threshold is $10.
For information about individual submitting a 1099, you might want to read here and here.
Good luck!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the Taxgirl!
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