Another year has come to an end and we would like to take the time to remind you of Form 1099 reporting requirements and changes to filing deadlines.
Certain payments made in the course of business are required to be reported on the appropriate Form 1099. The type of 1099 filed depends on the type and amount of the business expenditure. Some of the most common expenditures requiring a 1099 are listed below:
| Payments for: | Equal to or Exceeding: | Form: |
| Dividends | $ 10 | 1099-DIV |
| Interest (generally) | $ 10 | 1099-INT |
| Royalties | $ 10 | 1099-MISC |
| Liquidating distributions | $600 | 1099-DIV |
| Interest (paid in the course of business) | $600 | 1099-INT |
| Fees paid for services | $600 | 1099-MISC |
| Commissions | $600 | 1099-MISC |
| Prizes and awards | $600 | 1099-MISC |
| Rents | $600 | 1099-MISC |
Note: Generally, payments made to a corporation are not required to be reported on a form 1099. However, there are some exceptions such as attorney fees.
A copy of the 1099 is required to be postmarked to the recipient and the IRS by January 31, 2017. Failure to correctly file the required 1099’s within the due dates can result in penalties of up to $260 per return (based on when filed) with a maximum of $1,059,500 for each year.
In addition to the above mentioned requirements, business taxpayers will be required to answer two questions on their 2016 income tax returns: (1) Did you make any payments in 2016 that would require you to file Form 1099(s)? (2) If yes, did you file the required Form 1099(s)?
In order to properly fill out the required forms, you will need to obtain information from each person to whom you make qualifying payments. Form W-9 is used for this purpose and can be obtained by going to http://www.irs.gov/pub/irs-pdf/fw9.pdf.
The information above relates to the most common types of transactions and circumstances.