This post will focus on payments by for-profit organizations for rent and non-employee compensation as those are the most common uses of Form 1099-MISC.
In general, rent and payments to service providers (including related materials and supplies) in excess of $600 to unincorporated businesses (within the ordinary course of the trade or business, not personal payments) are reportable on Form 1099-MISC. In other words, payments to any entity that is not a corporation becomes a reportable event.
Payments to law firms in excess of $600 are reportable regardless of payments to a corporation or unincorporated business. Limited liability companies are not a corporation, therefore, are unincorporated. You should have a Form W9 on file with the service provider’s declaration of their tax identification number and entity. Forms are due to recipients by January 31, 2015 and to the IRS by February 28, 2015 (unless electronically filed which extends your due date). There are penalties for failure to file and you are required to disclose compliance in your business tax return.
For additional related reporting requirements and exceptions, visit:
Your tax professional can assist you with complying with 1099 reporting requirements.
For more information on how Moker CPA can help with your tax questions, please visit us at www.MokerCPA.com