Below are commonly asked questions and answers regarding 1099 filing:

Who should receive a 1099?

Each landlord and service Vendor paid $600 or more in the calendar year must fill out a W9 Form in order for their 1099 to be filed. Below are two common exceptions, please refer to the W9 instructions for more details (https://www.irs.gov/instructions/i1099msc):

• If the Vendor is a Corporation, then a 1099 is not necessary. For example, Streamline Bookkeeping is a Corporation so no 1099 is needed.
• If the Vendor is a law firm, a 1099 is necessary, even if they are a Corporation.

Most potential 1099 Vendors (if not all) will be listed in QuickBooks’ Chart of Accounts, under the Expense category: Outside Services, and Rent Expense.  It is the responsibility of the business owner to have the W9 information for the 1099 filing.

Reimbursements to 1099 Vendors

Typically, reimbursements to non-employee contractors are included in the 1099 amount.  See the link to the IRS instructions here: https://www.irs.gov/instructions/i1099msc

For Example:  XYZ Company pays $750 to a computer tech with the following invoice details: $700 for labor time, $50 for a modem that he purchased with the intent of being reimbursed.  The computer tech’s accounting is as follows: $750 Gross Income (which matches the 1099 amount) minus $50 Equipment (that the computer tech purchased on his Credit Card), which equals $700 Taxable Income for the computer tech.  The 1099 should be for $750, not $700.

To avoid no filing/late filing penalties, which are severe

The best practice is to have the W9 filled out by the Vendor before making any payments to them. Organizing all 1099 information early will help ensure an error-free and punctual filing.  All 1099s must be filed by January 31^st of the succeeding year (Ex. The 2021 1099s are due by January 31, 2022).

Can you sign a W9 online?

If your Vendor prefers fill out and sign their W9 online (as opposed to filling out a printed W9, scanning it, and emailing you the PDF), there are many eSignature platforms available online. For example, we typically use HelloSign (https://www.hellosign.com/blog/how-to-fill-out-a-w-9-form-online-using-hellosign)

Doesn’t my payroll provider (Gusto, Paychex, ADP, etc) file these?

Yes, your payroll provider files W2s for Employees, and 1099s for Contractors paid through their system. But there are additional potential 1099s paid outside of that system, such as Rent, or contractors paid via check, wire transfer, or any other payment method outside of the payroll system.

What if the 1099 Vendor won’t send me a W9?

Unfortunately it’s the responsibility of the business owner to have the W9 information for the 1099 filing.  Going forward it’s best to get the W9 before making any payments to a potential 1099 Vendor.

The link to the W9 instructions: https://www.irs.gov/pub/irs-pdf/fw9.pdf

Do I need to send a 1099 to a Vendor where it was a combination of service and product?

If they provided a combination of products and services, then typically yes they do need a 1099.  The exception is if they are a corporation.

If I have the Vendor’s W9 from last year, can we use that?

It’s good to request a new W9 from your Vendor as their information (address or EIN/SSN) may have changed. However if you do want us to file with last year’s W9 information, please confirm via email.

Please request that your 1099 Vendors complete their W9 forms, and then send the completed W9 forms to us. We urge you to collect W9s as soon as possible.

The link to the W9 instructions: https://www.irs.gov/pub/irs-pdf/fw9.pdf

What if the contractor is an International business?

For International contractors, although filing a 1099 isn’t necessary, it’s recommended that you still get their information for your records with this W8-BEN form.

irs.gov/pub/irs-pdf/fw8ben.pdf

Are reimbursements to contractors included in their 1099 total?

Yes, in most cases, reimbursements should be included in the contractor’s 1099 total. A common exception to this rule is for volunteers of non-profit organizations. For more details, please follow this link and see the Independent Contractor and Self-Employment Tax sections.

irs.gov/instructions/i1099msc

For Example:  XYZ Company pays $750 to a computer tech with the following invoice details: $700 for labor time, $50 for a modem that he purchased with the intent of being reimbursed.  The computer tech’s accounting is as follows: $750 Gross Income (which matches the 1099 amount) minus $50 Equipment (that the computer tech purchased on his Credit Card), which equals $700 Taxable Income for the computer tech.  The 1099 should be for $750, not $700.

Should restaurants receive a 1099?

Yes, a restaurant should receive a 1099 if they were paid $600 or more in a year. The exception is if the restaurant is a corporation.

What if a check payment to a Vendor does not clear the bank until after December 31?

Typically, we use the date the check cleared the Bank as the transaction date. Technically the date should be the day the Vendor received the check and was available to cash.  So a check that clears the bank after December 31 should typically be included in the following year’s 1099 total.

My Vendor is an LLC so shouldn’t it be exempt from filing a 1099?

LLC stands for Limited Liability Company, and is not a corporation, so a 1099 needs to be filed.