View Full Version : 1099 eligible or not?
12-16-2004, 10:44 AM
So what determines if a vendor is 1099 eligible or not? At my previous employer we never sent any 1099 forms. At my current one they're very by-the-books but I noticed that only 2 of our vendors are marked as needing to receive 1099 forms. What about misc business expensives like gasolise and telephones. Should I 1099 those as well?
Any person or unincorporated business that you pay $600 or more FOR SERVICES in the course of your trade or business needs to receive a 1099 form. "Services" does not include reimbursing someone for gas, postage or other supplies or expenses that they pay on the company's behalf.
The exception to that would be if you agree to pay someone for their time and expenses for a particular job that they do for you, such as time and costs to an attorney, then the whole amount would be included in his 1099 because he is going to include the entire amount in his income and then write off his own expenses. If you are just writing Sally a reimbursement check for office supplies she picked up and furnished a receipt to you, then that is not subject to 1099 reporting. It's not part of her service to you.
If you pay John Smith, the painter for painting your offices and it includes the price of the paint, the entire amount is included in the 1099.
For the record, Attorneys are supposed to get 1099s whether they are incorporated or not.
12-16-2004, 12:57 PM
So generally speaking 1099's are for services only. I don't send a 1099 for item purchased, correct?
12-17-2004, 10:35 AM
Further note - all law firms are to receive a 1099 for services even if they are incorporated. The IRS does not give the corporate exemption to law firms.
I had already said that, but that's OK. See, the IRS doesn't trust lawyers either.
12-17-2004, 02:00 PM
Still worth saying twice.
01-05-2005, 12:04 PM
What about insurance companies and office rent? 1099 those?
Office rent goes on another line of the 1099MISC. It's up at the top of the form in Box 1:RENT. The program will print that one also. It's used if your business pays rent to a private person or unincorporated business. You wouldn't have to send one to a professional real estate firm like Century 21 or Remax.
01-05-2005, 02:31 PM
For some reason the rent doesn't come up as a 1099 vendor. The RENT account type has been set to 1099-MISC: Rents and the landlord vendor has been marked as 1099 elgible with a SSN number.
What do I need to do?
Be sure that the Vendor master file has the SS# filled in with the complete address and zip code. The box to receive a 1099 should be checked.
Then to to Preferences, 1099s, and on the top line for Rents, select the expense account that you use from your chart of accounts when you pay the rent.
01-05-2005, 03:30 PM
Okay, I found the problem. We have TWO types of rents. Office rental space and equipment rentals. The box 1 rents was occupied by the equipment rental. I'll just switch everything to one expense account.
Thanks for your help.
Are you renting equipment from a private party?
01-05-2005, 03:55 PM
No, from companies. Our office is rented from an individual and equipment rented from businesses.
Then you don't need a 1099 for the equipment. Only for the office rent.
01-05-2005, 04:18 PM
So equipment rental is NOT eligible from a business? Is that only if the business is incorporated? What if the business is sole proprietorship?
Let's use an example- our company rents a crane from a sole proprietorship company but the crane is operated by one of their employees. Would I then 1099 for the cost of that rental? If, however, they simply rented us the crane and our own employee operated it. Would we then NOT 1099 for the cost of the truck?
If you are paying an unincorporated business or a person for services and the total is $600 or more during the year, they are eligible for 1099 reporting. If you're paying an unincorporated business for the use of the crane, no matter who drives it, you issue a 1099 for the total you paid him. If you rented the machine and paid him to run it, then you report the total. If you rent the machine and your own person operates it, you didn't pay him as much. You report what you actually paid. He is going to expense what he paid to his employee as his business expense.
When I said that if you were renting equipment from a business that you didn't have to issue 1099s, I meant from incorporated businesses. (like Aldrich Rentals or U Haul)
01-05-2005, 04:30 PM
Thanks for the clarification. You've been extremely helpful.
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