My clients have asked me a few common questions about 1099, I would like to share the answers with you so that you understand the rules more.
1. If I pay the contractors by credit card, do I need to include those payments in 1099?
Answer: No, you can only include payment by cash or checks.
2. What is the deadline of filing 1099?
Answer: it used to be confusing because the filing deadlines to the payees and IRS was different. However, effectively 2017, the filing deadline to both IRS and payees is the same. It will be by Jan 31, 2017.
3. If I own a rental property and pay a handyman over $600 during the year, do I need to file 1099?
Answer: it used to be required by it was repealed in 2011. Thus, you no longer need to file 1099 when your rental business is your passive income.
4. If I can’t get their w-9, how can I send out 1099 to the payees?
Answer: this question becomes irrelevant if you I insist getting the w-9 upfront. If the contractor refuses to provide you w-9, you should choose not to hire him or pay the contractor with a net amount and withhold 30% as backup withholding to IRS.
5. If your contractor runs the business as LLC, do you need to issue 1099?
Answer: Yes if the LLC files tax as partnership, then yes. If the LLC files tax as corporation, then you don’t have to file 1099 to this payees.
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