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
Showing posts with label 1099. Show all posts
Showing posts with label 1099. Show all posts
Tuesday, November 24, 2009
Thursday, June 4, 2009
1099 QUESTION
Hi Larry, I read your blog (regarding the 1099-MISC) and have a related question I hope you can help me with.
I received a 1099-MISC for about $5000 in "self-employment" compensation last year. Only about half of this amount is actually my income, the rest I paid out to 6 subcontractors. However, only one of them received greater than $600 from me so, strictly speaking, I am only required to send THIS person his own 1099-MISC.
I am considering sending the others--who earned less than $600--each a 1099-MISC anyway. Since I want to share my tax burden with my sub-contractors, would it behoove me to send out 1099s to each of them anyway (even though I'm not required to)--just so it's documented as non-employee compensation? Or is this just a waste of time & money? I appreciate any advice you have.
David
David, regarding your situation, having good records should help you to avoid any problems. As far as a 1099 is concerned, you really only need to give a 1099 to the individual you paid over $600. The other people you pay less than $600 to do not need a 1099. Just by sending them a 1099 does not document they are a non-employee.
If you need to obtain a Form 1099, you can download a copy from the IRS at http://www.irs.gov/, in the upper right hand corner there is a search tab.
I do need to mention that 1099s should have been issued to the individual by the end of January and a 1099 with a copy of the 1098 going to the IRS prior to the end of February. If you do get a notice from the IRS that your 1099s are late, I would argue with them that there should be no penalty for late filing. You won’t know about that problem for another six to nine months, but let me know if you do have a problem and I can walk you through it.
I did mention a 1098. A 1098 is really a cover form showing you only had one 1099. The 1098 can also be downloaded from the IRS website. Check out the forms, they are not as confusing as it sounds.
It is a pleasure serving you.
Larry Kopsa
I received a 1099-MISC for about $5000 in "self-employment" compensation last year. Only about half of this amount is actually my income, the rest I paid out to 6 subcontractors. However, only one of them received greater than $600 from me so, strictly speaking, I am only required to send THIS person his own 1099-MISC.
I am considering sending the others--who earned less than $600--each a 1099-MISC anyway. Since I want to share my tax burden with my sub-contractors, would it behoove me to send out 1099s to each of them anyway (even though I'm not required to)--just so it's documented as non-employee compensation? Or is this just a waste of time & money? I appreciate any advice you have.
David
David, regarding your situation, having good records should help you to avoid any problems. As far as a 1099 is concerned, you really only need to give a 1099 to the individual you paid over $600. The other people you pay less than $600 to do not need a 1099. Just by sending them a 1099 does not document they are a non-employee.
If you need to obtain a Form 1099, you can download a copy from the IRS at http://www.irs.gov/, in the upper right hand corner there is a search tab.
I do need to mention that 1099s should have been issued to the individual by the end of January and a 1099 with a copy of the 1098 going to the IRS prior to the end of February. If you do get a notice from the IRS that your 1099s are late, I would argue with them that there should be no penalty for late filing. You won’t know about that problem for another six to nine months, but let me know if you do have a problem and I can walk you through it.
I did mention a 1098. A 1098 is really a cover form showing you only had one 1099. The 1098 can also be downloaded from the IRS website. Check out the forms, they are not as confusing as it sounds.
It is a pleasure serving you.
Larry Kopsa
Sunday, January 18, 2009
1099 NOT NEEDED
Larry, I paid a painter $1,575 to paint my house. Do I need to send a 1099?
Ryle
Ryle, you only need to send a 1099 for business expenses. I presume that your house is your personal residence, so you do not need to send a 1099. I hope this helps. Larry Kopsa CPA
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