The 5 W’s of 1099s

January 13, 2020

In this episode, Tim Schuster, Jessie Cardona and Greg Bilecki, from EisnerAmper’s Private Business Services Group, discuss the who, what, when, where and whys of 1099 forms.


Transcript

Tim Schuster: Hello and welcome to this podcast on 1099s. We hope to provide you with useful information on those dreaded forms. I'm your host, Tim Schuster, Senior Manager in EisnerAmper’s Private Business Services. And with us today is Yesenia Cardona, a senior manager, and Greg Bilecki, a senior associate also in the firm’s Private Business Services Group. Today we'll discuss with Yesenia and Greg everyone's favorite subject, 1099s. I think our theme might be everyone gets a 1099. Yesenia, Greg, great for you both to be here today.
Yesenia Cardona: Great to be here.
Gregory Bilecki: Great to be here, Tim.

TS: So Greg, when are 1099s due for the 2019 tax year?
GB: Well, there are several due dates for the various 1099s, but let's talk about the most common one, the 1099 for non-employee compensation or a 1099-MISC. The due date for this 1099 is January 31 of 2020. This due day is for both the recipient copy and the copy that is filed with the IRS. Luckily, the IRS has many helpful tools that you can use for 1099s that are located on its website.
TS: Awesome. Jesse, who would be issued a 1099 miscellaneous?
YC: Well, Tim, like you said before, everyone gets a 1099. Typically, anyone you pay more than $600 for services you received during the year related to your business, they would be issued a 1099. We usually refer to these individuals as independent contractors. Keep in mind that these are not necessarily just individuals. These can be businesses such as partnerships, LLCs, and in some cases even corporations, which we will address later.
TS:Sounds good. So Jessie, do you have any examples for our listeners at home?
YC:Yes, so let's say you wanted to redo your office and you hire a painter. If you pay them more than $600, then you will probably have to issue him or her a 1099. Or let's say you want to get your company name out there so you hire an advertising agency. The key here is to whether you're paying for something tangible or not. So if you're buying a computer, you don't need to worry about issuing a 1099, but if you hire an IT consultant, then you would issue a 1099. Other examples are payments for commissions, landscapers and your accountants. And if you hire an attorney, they always get a 1099. No exceptions.
TS:That's very interesting, Jessie. Greg, what are some of those exceptions?
GB: Well, Tim, generally payments made to a corporation, with the exception of attorneys like Jessie mentioned, do not require a 1099 form to be issued. Other exceptions are payments made for utilities, telephone subscriptions and other similar payments. And if you pay for a service with a credit or debit card, you don't need to issue a 1099 for these payments since the credit debit card company takes care of that.
TS: That's very interesting, Greg. What information is needed to issue a 1099 form?
GB: Well, for starters, the most important thing our listeners can do is whenever they hire someone, they should always have them fill out a W-9. The form W-9 will have all the information needed such as name, address, taxpayer ID number, and most importantly, a checkbox that indicates whether they are an individual, partnership, LLC or corporation. And if they're a corporation, no 1099 is needed with the exception of attorneys, like we mentioned before. The information on the W-9, along with the total you pay them during the year, is what you need to issue the 1099, but remember, you will also need to file a 1096 as well.
TS: That's interesting. This is the first I'm hearing of a 1096. Jessie, what is a 1096?
YC:A 1096 is basically a cover page for all your 1099. On it, you will indicate the type of 1099 you're filing, whether it's a non-employee compensation. Since we're discussing non-employee compensation in this example, that would be a 1099-MISC. You will indicate the total number of 1099s included and then a grand total of the payments that you are reporting. This form will also have the company's contact information.
TS: Wow, guys, this is a lot of very useful information for our listeners. Jessie, do you have any last takeaways for our listeners?
YC: Yes, two very important things. Number one, you should always get a W-9 from a vendor before you pay them. Otherwise, you're going to find yourself scrambling at the end of the year trying to track vendors down for their information in order to prepare the 1099s. Number two, be mindful of the due dates. The January 31 due date is for both the recipient copy and the IRS copy. You don't want to incur unnecessary penalties for late or incomplete filings.
TS: Very strict deadlines. Jessie, Greg, thanks for both being here today.
YC: Thank you for having us.
GB: Yes, thank you Tim. Appreciate it.
TS:Our pleasure. And both of you, thank you so much for the valuable information. Before we close out our podcast, I always love to provide one of my famous New Jersey fun facts. I don't know if you guys are aware of this, but you can think New Jersey for drive-in movie theaters. The first one opened in Camden in 1933. Thank you for listening as part of the EisnerAmper podcast series. If you have any questions or there's a topic you'd like us to cover, email us at contact@eisneramper.com. Visit eisneramper.com for more information on this and a host of other topics, and join us for our next EisnerAmper podcast.

About Tim Schuster

Mr. Schuster is a Senior Manager providing tax compliance services to individual filers, as well as assistance on tax returns for companies in the manufacturing and real estate industries.

About Yesenia Cardona

Yesenia Cardona is a Private Client Services Group Director experienced with reviewed and compiled financial statements, outsourced finance and accounting, and tax planning and preparation for businesses and individuals.

Have Questions or Comments?

If you have any questions, we'd like to hear from you.


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