The Secret to Quick & Easy 1099s

Form 1099-MISC, Miscellaneous Income, is filed for each person in the course of your business to whom you have paid the following during the year:

• At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
• At least $600 in:
  • Rents (box 1);
  • Prizes and awards (box 3);
  • Other income payments (box 3);
  • Generally, the cash paid from a notional principal contract to an individual,   partnership, or estate (box 3);
  • Any fishing boat proceeds (box 5);
  • Medical and health care payments (box 6);
  • Crop insurance proceeds (box 9);
  • Payments to an attorney (box 10) (see Payments to attorneys, later);
  • Section 409A deferrals (box 12); or
  • Nonqualified deferred compensation (box 14).
  • You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment, if the payments you made relate to boxes 1-14, above.

Form 1099-NEC was introduced in 2020 to separate out the information which had previously been reported in Box 7 of Form 1099-MISC. 

Form 1099-NEC, Nonemployee Compensation (NEC), is filed for each person in the course of your business to whom you have paid the following during the year:

• At least $600 in: 
• Services performed by someone who is not your employee (including parts and materials) (box 1);
• Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish (box 1); or
• Payments to an attorney (box 1). (See Payments to attorneys, later.)
• You must also file Form 1099-NEC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment, if the payments you made relate to boxes 1-3, above.

Please note that payments to attorneys are treated differently depending on the nature of payments made.  Details can be found on the IRS instructions page for the 1099-MISC and the 1099-NEC.

Form 1099-NEC and Form 1099-MISC must be mailed or delivered to the recipients by January 31, 2025.  Because deadlines for filing vary by 1099 type, please refer to the current IRS publication linked to this web page to see this year’s filing requirements and deadlines. Please be sure to look at your specific state requirements also.

If you made payments to individuals, partnerships, LLCs, or LLPs in the course of your trade or business, you may be required by the IRS to distribute and file Forms 1099.  Please note, you do not need to file 1099’s on payments made to a corporation unless you are paying attorney fees or paying for medical services.

 Warning!  Failure to file or incorrect filing of Forms 1099 may increase your risk of an IRS or Oregon Department of Revenue audit, and/or result in penalties. 

Some examples of payments which may require completion of Forms 1099 include, but are not limited to:

Non-employee Compensation ($600 or more):

• Independent contractors
• Bookkeeping fees
• Independent contractors
• Janitorial services
• Commissions
• Rents
• Prizes/awards
• Royalties ($10 or more)
• Mortgage interest received ($600 or more)
• Interest paid ($600 or more)
• Dividends paid ($10 or more)
• Pension plan distributions
• Real estate transactions

Attorney’s Fees

• All payments of $600 or more
• All payment without regard to entity (sole proprietorship, partnership, LLC, LLP, corporation or s-corporation)

Please note:  You are not required to send a Form 1099 to Jones & Roth, P.C.  We are a corporation.

ALSO, payments made with a credit card, debit card or payment card (such as PayPal) are not to be included on 1099 MISC OR 1099 NEC. They are reported by the payment settlement entity. ACH payments must be reported.

If you require a vendor to supply you with a Taxpayer Identification number (an EIN or Social Security Number) you can download a Form W-9 from the WEB and send it to the vendor for completion.  (PLEASE NOTE:  We do not provide this service.)

For more information, please refer to the Instructions for Forms 1099-MISC and 1099-NEC. Make sure that you have all of the information you need before you begin to enter the data. 

You must have:

• Recipient’s legal name (the name by which their taxes are filed)
• Current legal mailing address
• Tax identification number (SSN or EIN, depending on business type)
• You may send the vendor a Form W-9 requesting this information (Best practice is to request this when first working with a new vendor)

What IS Reportable?

Important: There are exceptions to the list below. See the section on “What IS NOT Reportable” for more information.

Payments made in the course of your business or trade, such as the following:

Examples of “Services” are:

Payments for services include the parts or materials used to perform the services, if supplying the parts or materials was incidental to provide the service. This means if you pay more for the service than for the parts to carry out the service, report the entire amount.	1099-NEC
Repairs to office machines, buildings, equipment (whether or not they are considered Capital Improvements or Leasehold Improvements).	1099-NEC
Professional service fees to attorneys, accountants, architects, speakers, directors, referral fees, experts in legal adjudication, witness fees, entertainers, independent contractors.  Please note:  Attorneys who are corporations are NOT exempt!	1099-NEC
Advertising fees	1099-NEC
Copying services	1099-NEC
Notary fees-payment for the notary to notarize a document and/or payment for an employee to become a notary. Reportable unless the notary payment is to a federally tax-exempt agency.	1099-NEC
Payments to instructors/teachers/trainers, training groups, choir director, minister service.  This includes companies who administer tests such as the GED, etc.	1099-NEC
Maintenance to lawn or vehicle.	1099-NEC
Conference and/or registration fees are reportable unless the entity is a federally tax-exempt organization.	1099-NEC
Prizes and awards paid as a reward to service providers who are non-employees.	1099-NEC
Prizes and awards that are not for services performed, paid to your employees, or received for recognition of accomplishments.	1099-MISC
Royalties such as those paid directly to an author or literary agent.	1099-MISC
Payments made to a deceased employee’s estate for accrued wages, vacation and other compensation.	May be a 1099-MISC, reportable on two separate forms!
Payments for punitive damages in a lawsuit.  This is very tricky, so contact our office or the IRS for clarification on reporting this.	May be a 1099-MISC, reportable on two separate forms!

Examples of “Rent” are: 

Rent for office space, pasture land, etc.  Storage space is exempt.	1099-MISC
Rentals such as booths at fairs, hotel rooms, parking spaces, equipment, boats, or cars.	1099-MISC
Coin operated amusements including video games, pinball machines, jukeboxes, pool tables, slot machines, or other machines operated by coins.	1099-MISC

Examples of “Medical Services” are: 

Medical and health care services such as hospital fees/charges, doctor fees/charges, examinations, dentures or lab tests. Please note:  Medical Service providers who are corporations are NOT exempt!	1099-MISC
Medical Boards, which include payments for research fees and/or payment for an employee to register or join a specific medical board.	1099-MISC

What IS NOT Reportable?

Important: If even one of these apply, then you do not report the check.

• Checks written for products/goods only, with the exception of Medical Services (such as dentures, injections).
• Payments made electronically such as by PayPal, debit card, credit card or other payment card. Please note that Venmo payments ARE reportable, unless they are payments to a business profile or unless they are transactions tagged as being for “goods and services” (for these payments, Venmo will issue a 1099-K and you do not need to prepare a separate 1099). Please see Venmo’s FAQ page for more details.
  Note: If you are a QuickBooks user, you may type “Debit” in the check number field and these payments will be filtered out.
• Reimbursables
• Permanent Change of Station damage claims
• Bank fees
• Stamps
• Federally tax-exempt merchants, vendors, or corporations. 
  Note: The merchant, vendor, or corporation must be able to provide you with a copy of their ruling or determination letter (tax-exempt status letter) that they received from the IRS which states they have been approved to be federally tax exempt. If they cannot provide the ruling or determination letter they received from the IRS, then they are not federally tax-exempt.
• Government agencies (federal, state, city, county, parish)
• Federally tax-exempt agencies
• Boy Scouts
• Red Cross
• State-owned Colleges and Universities
• Hospitals owned and operated by the United States, State, or the District of Columbia and any of their subdivisions
• Utilities such as electric, gas, water, telephone services, cable.  Itemized utility bills for which a tenant DoD agency is billed by a private college or private university.
• Delivery services such as Federal Express, UPS, and all related small package transportation services.
• Safety deposit box – considered storage
• Moving and warehouse storage.  The IRS considers this storage instead of rent.
• Subscriptions – to magazines, newspapers, etc.
• Copyrights and publishing rights
• Mechanical license for musical/music use
• Attorney license
• Internet/computer renewal license
• Memberships in clubs, organizations, societies that are federally tax-exempt organizations
• Catholic priests, if they took a vow of poverty.
• Corporations are not issued 1099s unless they are Attorneys or providers of medical services.

Tip:  If they are a regular business, they will most likely NOT be federally tax-exempt.  Request a copy of their IRS determination letter which states they are federally tax-exempt.   The federal government has to issue 1099-MISC to corporations where the commercial world does not.  Therefore, some businesses believe they are federally tax-exempt when they are not.

For a complete listing of eligible and non-eligible payments,
please refer to the IRS About Page for 1099-MISC and 1099-NEC.

Most Oregon small businesses are able to file their own Forms 1099 with the help of our Video Tutorials and using the iWire online portal to submit W-2s and 1099s electronically. While we don’t make specific recommendations, any businesses looking for additional support can do an online search and find a variety of websites that provide Form 1099 filing services.