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1099 Filing Requirements

Businesses who pay independent contractors, royalties or other non-employee workers must file 1099 forms with the IRS.

Non-employee compensation of $600 or more is reportable in Box 7 of Form 1099-MISC.

Include fees, commissions, prizes and awards for services performed as a non-employee, and other forms of compensation for services performed for your trade or business by an individual who is not your employee.

Businesses are generally not required to file 1099s for payments made to an entity taxed as a corporation but this exemption from reporting payments made to corporations does not apply to payments for legal services.

What is non-employee compensation?  If the following four conditions are met, you must generally report a payment as non-employee compensation.

  • You made the payment to someone who is not your employee;
  • You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
  • You made the payment to an individual, partnership, estate, or, in some cases, a corporation; and
  • You made payments to the payee of at least $600 during the year.
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