Saturday, January 22, 2011

Reporting Payments on Form 1099-MISC

You must file Form 1099-Misc for each person to whom you have paid during the year at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments in the course of your trade of business.

If the payment included both services and merchandise/parts/materials, you report the gross amount (the contractor is responsible for reporting how much of that is labor and how much is material.)

Report on Form 1099-Misc only when payments are made in the course of your trade or business. Personal payments are not reportable.

Some payments are not required to be reported on Form 1099-Misc, although they may be taxable to the recipient. Payments for which a Form 1099-Misc is not required include: generally, payments to Corporations; or payments for merchandise, telephone, freight, storage and similar items.

Payments for attorney fees must be reported on Form 1099-Misc even if made to a corporation.

This is only a brief outline of Form 1099-Misc reporting requirements. Please contact me directly for a free consultation about your individual tax situation.