Are You Ready? What You Need to Know About 1099s

New in 2011 to all federal business tax returns (i.e. Schedules C, E, F and Forms 1065, 1120, 1120S, etc.) was a box asking whether any payments were made during the year that would require Form 1099 to be filed and a box asking whether or not you filed all required Forms 1099.  It is becoming more and more important that you comply with all l099 reporting requirements.  When you sign your tax return, you are stating that, under penalties of perjury, to the best of your knowledge and belief your tax return is accurate and complete.  If all Forms 1099 are not filed, you could be held liable in the event of an IRS audit.

This letter is geared towards Form 1099-MISC, the most common Form 1099.  Forms 1099-INT and 1099-DIV meet the many of the same requirements, but must be sent to everyone you paid $10 or more.

As a reminder, you need to send a Form 1099 to all sole proprietors, partnerships, and LLCs that you paid rent or royalties, as well as any independent contractors and attorneys that you paid for services in 2012.  Incorporated vendors, except for attorneys, are exempt from this requirement.

You are only required to send a Form 1099 to anyone meeting the above requirements if you paid them $600 ($10 for royalties) or more in 2012. Please review your records to see if you have any vendors who qualify.