Who Gets a 1099?

Generally, you must issue a 1099 to people you have paid $600 or more in the course of your trade of business for rents and services. Failure to file the form can result in significant fines from the IRS.  When determining whether to issue a 1099, ask yourself the following questions.
  1. What type of relationship do you have with the person or company? Typically, 1099’s are issued to independent contractors and other firms that are not on your regular payroll.
  2. How much did you pay the person or company?  Payments of $600 or more require a 1099.
  3. What did you receive in exchange for the payments?  Rents and services require the issuance of a 1099.  Payments for merchandise do not require a 1099.
  4. What type of entity was the payment made to?  Payments to sole proprietors, partnerships or LLCs require a 1099.  Payments to corporations and S corporations do not require a 1099.
  5. Where any payments made to attorneys?  Payments for legal services of $600 or more require 1099 reporting regardless of the type of entity.
When in doubt, send it out!
 
If you’re not sure whether the payment requires a 1099, send one anyway. There is no harm done when sending a 1099 that is not required but failure to file a 1099 that was required could cost you!
For more information on 2012 1099 filing requirements, see the IRS 2012 1099-MISC Instructions.