QUESTION ON 1099s

Larry,

Could you answer a quick question? Several elderly friends have asked me to help them with administrative work in their home. I would probably do this on an ongoing basis and I am sure each would end up paying me more than $600 a year. I would report all of this money but am concerned for the people I would be doing the work for. Do they have to issue a 1099 for the work I would do for them? Could I just report the money quarterly without ever getting a form from them and have it be legal, I don’t want to get them into trouble?

Alison

Alison, if I understand it, you’re going to be kind of like a Girl Friday? Opening mail, paying bills, that sort of thing, at times that are convenient for you – and for a number of different people? Assuming that you can’t be classed as a household employee (which I think you’re not if my understanding of your situation is correct), then there is no obligation for your customers to report payments made to you.

Forms 1099-MISC are generally issued when payments are made in the course of trade or business. You do not need to report payments for personal items on a 1099.

For example, a painter paints my office for $1,000. I must give him a 1099. A painter paints my house for $1,000. I do not need to give them a 1099.

If your customers are making payments to you for services in much the same way that they would pay their hairdresser or a kid that occasionally mows the lawn, there’s no reason to submit a 1099 to you. Again, this assumes that you’re self-employed and that you control how the work is done. A self-employed worker also usually provides his or her own tools and offers services to the general public in an independent business – which sounds like what you’re doing.

If, however, you could be classified as a household or other employee (which would result in a form W-2 issued to you), or if you’re performing services for your customer’s trade or business (which would result in a form 1099-MISC issued to you), that’s a different story. I hope that helps. Good luck with your business!

Larry Kopsa CPA