Hello, I'm Jill from TurboTax with some important information about issuing 1099-MISC tax forms.
Do you operate a trade or business? If the answer is yes, you may want to learn about your potential 1099-MISC filing requirements. The IRS uses the 1099-MISC as a means to collect information regarding certain payments you make during the year that relate to your trade, business or rental properties, but never to report personal transactions.
There is a wide range of transactions that will trigger your obligation to issue a 1099-MISC to the recipient of your payment. But some of the more common transactions include paying $600 or more to an attorney or law firm for legal services, payments of $600 or more in compensation in exchange for services, such as to an independent contractor, and to report the payments you make to rent real estate, such as for an office or warehouse.
You must also issue a 1099-MISC if you pay $10 or more in royalty fees or issue prizes and awards of $600 or more. And if you ever pay a lawsuit settlement, you must report all payments you make other than those that compensate an individual for physical injuries or to pay their medical expenses.
When evaluating whether you have an obligation to issue a 1099-MISC, always remember that the payment amount thresholds don't apply on a per-payment basis. For example, if you make three separate payments of $100, $400 and $200 to an independent contractor during the year, you must issue a 1099-MISC since your total payments equal $700. That's $100 more than the $600 threshold.
And lastly, to avoid IRS penalties, be sure you are aware of the 1099-MISC reporting deadlines. In most cases, you must provide the payment recipient with a copy of the 1099-MISC by January 31 immediately following the end of the tax year in which you make the payments. You must also file the 1099 with the IRS by the end of February. But if you choose to file it electronically, the IRS gives you more time.
TurboTax Home & Business offers special guidance for preparing 1099 forms for your employees and contractors. You can even print them out on plain paper right from TurboTax.