Don't Say I Didn't Warn You.

This time of year, businesses focus on the 1099s they will need to issue by 1/31 of next year. The question we ask is "Who do I (the business) need to send a 1099 to?" The easy answer is that you should send 1099s to everyone who meets the criteria listed below.??

Another very important question businesses generally don't ask is? "Who should I get a w-9 from?" The W-9 is the form?we ask our vendors to fill out so we can provide them with the 1099.? In general, my response is that you should request a 1099 from any vendor who provides services except the Targets, Starbucks and the likes of the world.??

I tell clients they should get a 1099 from all their vendors they get qualified services from because often it is not clear whether the vendor needs to receive a 1099 but it is always the business's responsibility to provide qualify the vendor and provide the 1099 inf necessary.? The best possible advice is to not pay or do business with a vendor until they provide you with a W-9 or written confirmation that they are exempt?from 1099 reporting.

1. Form 1099-MISC:

1. At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.??

1. At least $600 in:

1. Rents

1. Prizes and awards

1. Other income payments

1. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate

1. Any fishing boat proceeds

1. Medical and health care payments

1. Crop insurance proceeds

1. Gross proceeds paid to an attorney

1. Section 409A?deferrals

1. Nonqualified deferred compensation

1. Payments to corporations for:

1. Cash payments for the purchase of fish for resale

1. Medical and health care payments

1. Substitute payments in lieu of dividends or tax-exempt interest

1. Gross proceeds paid to an attorney

1. Form 1099-NEC:

1. At least $600 in:

1. Services performed by someone who is not your employee (including parts and materials)

1. Payments to an attorney

1. Sales totaling $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale.

Additionally, you must file Form 1099-NEC for each person from whom you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

FInes for not properly filing 1099s are very steep. Take this seriously and talk to your CPA about this.