Demetrius J. Karos, Ltd. Tax Representation From A Former IRS Employee

act now to schedule a consultation
Call 815-534-4402

When am I obligated to file a 1099 for payments I make?

Previous posts on this blog have talked about how businesses of all sizes in Illinois have an obligation to withhold federal and state payroll taxes from employees. They do not have to do so with respect to independent contractors who work for their business on occasion.

Businesses still have some legal obligations with respect to these independent contractors, however. Specifically, the employer must file what is called an informational return with the Internal Revenue Service, as the IRS still needs to know when and how people are being paid.

A business is supposed to file a 1099-MISC for all payments it makes to other service providers, assuming they are independent contractors. There are other occasions on which some type of 1099 will be required. There are a couple of exceptions to this rule. For one, if the business is making a payment to a corporate entity, then no 1099-MISC is necessary.

Likewise, no 1099 is necessary if the payment is to an individual, a sole proprietorship or a general partnership, if, and only if, the total number of payments in a tax year is less than $600. By way of example, a business need not provide a 1099 to a plumber who, on one occasion, comes in and fixes a leaky pipe for a couple hundred dollars.

While this requirement is fairly black-and-white and does not carry a huge potential for tax controversy, this doesn't mean issues never arise. It is important for businesses to do internal checks to make sure staff are fulfilling this requirement and doing so correctly.

No Comments

Leave a comment
Comment Information

Make an appointment at one of our conveniently located offices today.

Email Us For A Response

Request more information here about our tax law
and estate planning and administration services.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Frankfort Office:
1 Old Frankfort Way
Frankfort, IL 60423-1719

Toll Free: 800-465-6208
Phone: 815-534-4402
Fax: 815-806-9595
Frankfort Law Office Map

Naperville Office:
5th Avenue Station
200 East 5th Avenue
Suite 125
Naperville, IL 60563

Toll Free: 800-465-6208
Phone: 815-534-4402
Fax: 815-806-9595
Map & Directions