What Payments Need To Be Reported On Form 1099?
If you made or received a payment in a calendar year as a small business or self-employed individual, you most likely are required to file an information return (Form 1099) to the IRS.
If you engaged in certain financial transactions during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS. Below is the most common type of transactions that you have to report.
- Services performed by independent contractors — those not employed by your business.
- Prizes and awards, as well as certain other payments — termed other income.
- Backup withholding or federal income tax withheld.
- Payments to physicians, physicians’ corporation or other suppliers of health and medical services.
- Substitute dividends or tax-exempt interest payments, and you are a broker.
- Crop insurance proceeds.
- Gross proceeds of $600 or more paid to an attorney.
- Interest on a business debt to someone (excluding interest on an obligation issued by an individual.
- Dividends and other distributions to a company shareholder.
- Distribution from a retirement or profit plan, or from an IRA or insurance contract.
- Payments to merchants or other entities in settlement of reportable payable transactions — any payment card or third-party network transaction.
Keep in mind that information is for businesses. Here are some situations where you may not need to file an Information Return:
- You are not engaged in a trade or business.
- The recipient of the payment is taxed as an S or a C Corporation
- The sum of all payments made to the person or unincorporated business was less than $600 in one tax year.
- Payments were made via credit card.
This is just an introduction to a complicated topic, and the mechanics of filing such a return are filled with essential details. If you're running a business, even a small one, be sure to discuss the details with a qualified professional.