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When do you have to send a 1099? When don’t you?

When do you have to send a 1099

This week, I have to scrape everything together for my CPA to issue 1099s.  And to do that, I need to know to whom I should give 1099s and to whom I shouldn’t.

Let me tell you, wading through this was a royal pain in the ass!

IANACPA (I am not a CPA), but with that disclaimer, here’s what I found out for 2014 taxes, presented in a simple Q&A format.

1.  Did you pay less than $600 each to all people or entities who are not your employees during the course of the year?

Yes – No 1099s for you!

No – You might have to issue a 1099.  Keep going….

3.  Was the payment made to a corporation and not a person or an entity that is not a corporation?

Yes – No 1099s for you!

No – You might have to issue a 1099.  Keep going….

4.  Did you pay this person or entity using a credit card?

Yes – No 1099s for you!

No – You might have to issue a 1099.  Keep going….

5.  Did you pay the person using PayPal AND you selected “pay for goods or services”?

Yes – No 1099s for you!

No – You might have to issue a 1099.  Keep going….

6.  Is the person or entity non-American?

Yes – No 1099s for you!  You may possibly have some other paperwork, though.  UGH.

No – You almost certainly have to issue a 1099.

If you answered no, then you probably paid more than $600 to a non-corporate entity or person through Paypal as a “gift to friends or family”, through cash, through check, through direct deposit, or through other similar means.  And YES, you have to file a 1099.

BONUS QUESTION:  Did you pay more than $10 in royalties to a person or entity?  Because the threshold for royalties is $10, not $600.

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