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R.D. Barnett PLLC

Information Returns

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Forms 1098 and 1099 are information reports, which must be filed with the Internal Revenue Service. These report amounts paid by you in the course of your trade or business to certain recipients. The type of payment made determines the form required.

Download the relevant documents related to information reporting by clicking the items below:

Relevant Federal Items

Relevant Washington State Items

What's New:

  • New filing date. 

The PATH Act, P.L. 114-113, Div. Q, sec. 201, requires Form 1099 that includes nonemployee compensation (NEC) to be filed on or before January 31, 2021 and eliminated the automatic 30-day extension for forms that include NEC. Beginning with tax year 2020, use Form 1099-NEC to report nonemployee compensation.

*Failure to file accurate and timely information returns could result in penalties from $50 to $530 per form.

Reporting requirements fall into three major categories:

  1. Payments for services, direct sales and miscellaneous compensation.
  2. Payments of interest rent, royalties, dividends, original issue discounts, gains and profit distributions.
  3. Payments from pensions, annuities and IRAs.
  • Redesigned Form 1099-MISC.

Due to the creation of Form 1099-NEC, the IRS revised Form 1099-MISC and rearranged box numbers for reporting certain income. Changes in the reporting of income and the form’s box numbers are listed below.

  • Payer made direct sales of $5,000 or more (checkbox) in box 7.
  • Crop insurance proceeds are reported in box 9.
  • Gross proceeds to an attorney are reported in box 10.
  • Section 409A deferrals are reported in box 12.
  • Nonqualified deferred compensation income is reported in box 14.
  • Boxes 15, 16, and 17 report state taxes withheld, state identification number, and amount of income earned in the state, respectively.
  • Specific Instructions for Form 1099-MISC.

File Form 1099-MISC, Miscellaneous Income, for each person in the course of your business to whom you have paid the following during the year:

  • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
  • At least $600 in:
  1. Rents (box 1);
  2. Prizes and awards (box 3);
  3. Other income payments (box 3);
  4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
  5. Any fishing boat proceeds (box 5);
  6. Medical and health care payments (box 6);
  7. Crop insurance proceeds (box 9);
  8. Payments to an attorney (box 10) (see Payments to attorneys, later);
  9. Section 409A deferrals (box 12); or
  10. Nonqualified deferred compensation (box 14).

Available to download below is a detailed list of all Forms 1099 and other information returns that are required to be filed for 2019. The list includes minimum amounts requiring reporting, and the dates forms are due to the IRS and to the recipient. A copy of the instructions and forms may be obtained at the IRS’s website www.irs.gov. Search for specific form instructions and refer to General Instructions for Certain Information Returns, Page 20.

  • Read the instructions carefully. The forms must be prepared in accordance with the instructions. If these instructions are not followed, you may be subject to a penalty for each incorrectly filed document. Transmittal Form 1096 requests the name and telephone number of person to contact if the IRS needs more information.
  • In order to begin the procedure of preparing the Information Forms, it is necessary to obtain a Form W-9 from each person to whom a Form 1099/1098 must be issued. Generally these recipients will be those performing services and receiving rents aggregating to $600 or more for the year, and recipients receiving interest, dividends, royalties, etc. of $10 or more for the year. If a recipient refuses to complete a Form W-9, you are required to withhold 28% of all payments and forward the withholding to the Internal Revenue Service.
  • The exemption from reporting payments made to corporations no longer applies to payments for legal services. You must report ALL attorneys’ fees.  Generally, attorney’s fees are reported on Form 1099-MISC, Box 7. Under certain circumstances (settlements) gross proceeds paid to attorneys are reported Form 1099-MISC, Box 14. 

A major question that has been raised in the past is how to treat payments to a person who is providing both service and assets, e.g. an electrician installing an air conditioner. Even though the bill may segregate the price of the installation from the price of the air conditioner, it is considered safest to report the gross amount with any other payments on Form 1099.

Many of our clients have become very familiar with the use of Forms 1099 in reporting amounts that they pay to subcontractors.  Please remember that a subcontractor must be a bona fide business. You must be certain that the individual qualifies as an independent contractor for both state and Federal purposes.

Taxpayers filing a Form 1065 (Schedule B, 18 a/b), Form 1120 (Schedule K, 15 a/b), Form 1120S (Schedule B, 10 a/b), Form 1040 (Schedule C, Lines I and J) and Form 1040 (Schedule F, Lines F and G) will be required to positively affirm that all required Forms 1099 have been filed.