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.
  • Rent.
  • Royalties.
  • 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.

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