Saturday, January 26, 2013

Who Do You Have To Issue 1099-MISC Tax Forms To?


January starts off with a blissful anticipation of a glorious new year. It quickly turns into a panic as you try to get your finances in order so you can issue 1099-MISC tax forms. Ah, but who do you have issue them to?
The 1099-MISC tax form is an informational tax return of sorts. It tells the IRS who you paid certain monies to during the year. Ostensibly, this information is used to see if the people you report on are reporting the correct amounts of money paid to them. In reality, this process results in tens of millions of 1099-MISC being filed and they are really only looked at if a party is audited. Still, you have to issue them.
Since we are talking about a tax issue, you know it isn't going to be simple and straightforward and it is not. The rules for who you report on break down along the lines of what profession they are in, how much you paid them and just a few bizarre requirements. Let's take a look.
1. In general, you must report on any independent contractor you paid $600 or more during the year for services rendered. This is the most common category that people run into. If you paid someone $600 to create a brochure for your business, you file a 1099-MISC.
2. On the weird end of the scale, we have the fish issue. For some reason that I am sure makes sense if you drink enough vodka, you must report anyone to whom you paid more than $600 to during the year for fish. Yes. As in fish you eat. No, you don't have to report your sushi chef. It is only for monies you pay directly to the person who caught the fish. And the government wonders why people hate dealing with taxes!
3. Another fascinating oddity is the sale of consumer products to a buyer by you. If you sell more than $5,000 worth of consumer product to a buyer who is reselling them, then you have to report him or her. Ah, but there is more. This only has to be done if the buyer does not have a permanent retail establishment. Confused yet?
4. Attorneys take it in the kisser when it comes to 1099-MISC filings. You must report any gross proceeds you paid to an attorney during the year. There is no $600 minimum.
5. The Secret Spy Reporting Requirement. You have to love the IRS. Why? Well, you are also required to file a 1099-MISC for any payments you make to an INFORMANT(!). If you are doing it as a government employee, you do not have to file the 1099-MISC.
Most people think of the 1099-MISC tax form as a simple required document if you made payments to independent contractors. As you can see, it is much more. The above represent only a small sampling of when you must file the form. There are also requirements if you received a prize, award, certain scholarships and so on. Make sure to speak with a CPA in your area if you are concerned.


Article Source: http://EzineArticles.com/936022

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