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IRS Form 1099-MISC Instructions for Recipients in 2016

Posted by Admin on 8. February 2017 03:38

The 1099-misc form is used for reporting specific payment types made in business or trade. If you are self-employed or in business, you might have to submit form 1099-MISC to both the business or the person you are making payments to and to the IRS. You can even submit form 1099 online. If you are a businessman or an individual making payments to others then it is necessary for you to remain aware of 1099-MISC instructions. IRS form 1099-MISC instructions will help you in completing and submitting Form 1099 in the best way possible without making any mistakes.

When is Form 1099-MISC Needed?

Trading companies and business will have to fill out a 1099-MISC form for independent contractors, individuals and subcontractors and others in circumstances where:

Payment of $600 or more is made for:

·         Crop insurance proceedings

·         Cash payments to fishermen

·         Proceed payments made to lawyers

·         Health and medical care payments

·         Awards and prizes

·         Services like materials and parts

·         Rents and various other payments type not covered under any other document that reports all sorts of financial information.

Payment of $10 or more is made for:

·                       ·    Royalties, and

·                       ·    Broker payments in lieu of tax-exempt interest or dividends

Such payments need to be reported if the individuals receiving these payments are not corporations. In other words, these payments should be reported if the recipients are partnerships, individuals or limited liability companies treated as sole proprietorships or partnerships. Other different payment types made to corporations need to be reported by making use of Form 1099-MISC.

Form 1099-MISC Instructions- Steps for Preparing Form 1099-MISC

It is necessary for you to request that your contractors, vendors and other recipients of payments submit Form W-9 to you. Form W-9 is important because it will give you the legal address, name and the taxpayer identification number of the vendor. This information is of great importance because it is needed when preparing 1099-MISC form. Further in the form 1099-MISC instructions category, it is necessary for you to keep a track of all the payments that you make in a bookkeeping system. It is important that you know whether the payments fall under the categories that have been listed above. It is also necessary that you know whether the payments that you make to recipients reach the $600 or the $10 threshold. Finally, you must also have an idea about the specific amount that you pay to a recipient during a calendar year.

1099-MISC Deadline and Penalties for Late Filing


You must provide the payment recipient with a copy of Form 1099-MISC by February 1, 2017. The payments should be reported for the 2016 tax year. The IRS should receive Form 1099-MISC by February 28, 2017. You also have the option of filing Form 1099-MISC electronically by March 31, 2017. A 30-day extension for filing 1099 forms with the IRS can be requested by businesses. They can request the extension and file their 1099s using 8809 Form. It is to be noted that an extension should not be treated as the permission to use additional time for providing a recipient with form 1099.

If you are unable to follow the form 1099-MISC instructions properly, you are likely to make mistakes and even fall prey to the penalties of late filing form 1099-MISC. The penalties are as follows:

  • $60 penalty for late payment of form 1099 by 30 days and prior to 1st August.
  • $30 penalty for late payment of form 1099 by 30 days
  • $100 penalty for filing 1099 on or after 1st August.
  • $250 penalty for international filing failure.

IRS 1099 Tax Guide - Know all about Form 1099 MISC Box 10 and Box 14

Posted by Admin on 8. January 2015 23:29

Box 10 is Crop Insurance Proceeds which is about the money proceeds from crop insurance as offered by insurance companies to farmers of the land who are insured in the USA. Hence it is the insurance companies who need to attempt or see this box-10 for the appropriate payments made or to be made to farmers as relating to farmers ‘crop insurance property. But if any farmer notifies the insurance company that the expenses due to farming in rough and good weather are capitalized under section 278, 263A, or 447 then the income be exempted from taxes through IRS form 1099-MISC. The “capitalized” here means the advantage as given to the farmers or farmers taking advantage through the Governments’ policy so as to help and nurture the farmers’ activities towards cultivation and developing good crops for the nation’s needs. 

This is no subsidy but a relief to farmers cultivating crops for the nation. However there is a limit as prescribed to be $600 as the standard threshold to crop insurance proceeds as a relief and further more to $600 need to be reported in form 1099-MISC as against the minimum threshold of $600 should be understood. Therefore it is the insurance companies who are responsible for making payments to farmers are the one to correctly report towards this Box-10 of IRS form 1099 MISC.

Form 1099 MISC Box 10

IMG Src: Flickr

Box-14 –Gross Proceeds Paid to an Attorney- As according to IRS the form 1099-MISC Instructions, If one have paid $600 or more for any connection with legal services not-withstanding of say the services are performed for the payer. A court judgment against a defendant brings in a scenario that the payments are determined to be made eligible as payable to a claimant’s attorney in conjunction with the case. The attorney is broadly defined to include any provider of legal services such as law firms, paralegals, court reporters, and so on. Legal services refer to any service offered under the supervision of an attorney including related services. 

The corporate exemption does not apply for payments made to attorneys. Applicable exemptions include wages paid to an attorney as wages, which should be reported on Form W-2, and payments by the entity to its own defendant, which should be reported on 1099-Misc Box 7. Additionally, payments to any nonresident alien are excluded because they are reported on Form 1042-S. Additional exclusions for specific types of legal services and relationships apply as well. The standard $600 reporting threshold applies to gross proceeds paid to an attorney. For more information please follow-up with IRS guidelines and as well as for your e-filing tax returns for 1099-MISC Register with us and start Filing. 


What is a Form 1099-MISC and How to File 1099-MISC Form?

Posted by Admin on 24. March 2014 00:23

The miscellaneous income is titled as form-1099-MISC.This federal form 1009 is required to file every year as a year-end report. Employers will provide the independent contractors and other non-employees with this federal contractor form 1009 and so that they are required to file informing the IRS of their federal and state income tax information returns. The recent rulings of IRS are incorporated in the form 1009 in a way suitable for certain players are as follows-

• The taxpayer can now have a foreign address. A taxpayer have an EIN but not in the USA

• Box 11 is new, Foreign tax paid on payments reported on form 1099-MISC. Report this amount in U.S. dollars.

• Box 12 is new. Foreign Country or U.S. Possession for which the foreign tax was paid and reported in box 11.

As IRS through their expert stated that "There were a ton of proposed changes to the 1099-MISC form for the last several years. But those changes were rescinded. A provision in the Affordable Care Act (Obamacare) wanted to change the 1099-MISC form which reports $600 in services to "goods and services". That would have really expanded the use of this form. But the new foreign address and tax paid is growing the form as well."

Who Must File Form 1099-MISC? 

Businesses should provide form 1099-MISC for the current year when paid $600 or more in the past year to individuals, independent contractors, and other businesses. $10 or more paid towards royalties and for some direct and indirect sale of any consumer goods to an agent/wholesaler or retailers for resale to the worth of $5000 or more.

Where to Get 1099 Forms?

Form 1099-MISC must be provided to any "nonemployee" to whom you paid $600 or more during 2011. This includes:

1) Payments for rental property expenses

2) Payments to a physician, physicians' corporation, or another supplier of health and medical services. Issued mainly by medical assistance programs or health and accident insurance plans.

3) Payments for services performed for a trade or business by people not treated as its employees. Examples: fees to subcontractors or directors and important payments. 

4) Fish purchases paid in cash for resale.

5) Crop insurance proceeds

6) Gross proceeds paid to attorneys. (Box 14) (Due to IRS February 15th).

Difference Between W-2 and Form 1099-MISC

Form 1099–MISC is given by businesses to non-employees like independent contractors and other small companies towards payments made no later than January 31st. W-2 is given to employees working for an organization by the employer.

Then the businesses have to submit by e-file 1099-MISC forms to IRS on or before February 28th in a calendar year.  Along with Copy A of all the 1099-MISC forms businesses provided to non-employees, one must submit a Form 1096 transmittal form to the IRS which totals all information from all 1099 forms. One should not use the downloaded 1099-MISC copy A from the internet because Copy A of the 1099-MISC form is in a specific color of red ink and cannot be duplicated.

One can submit all forms of 1099-MISC along with transmittal form 1096 (Annual summary and transmittal of US information returns) to IRS. E-file your Form 1099 Online before 1099 deadline 2017!