Procrastinating about getting your 1099s filed?
You're not alone.
Fortunately, our new Vendor 1099 report can help you get organized and get them filed by the deadline!
Our new Vendor 1099 Report provides a global summary of total compensation paid to your Vendors on all of your projects in a given year.
This means you'll have all the information you need right at your fingertips when it's time to file those pesky taxes.
The Form 1099-NEC (non-employee compensation) is a form used to track the amount of income paid to independent contractors and businesses (that are not corporations).
The general rule is that you must issue a Form 1099-NEC to any independent contractors that you've paid at least $600 in services in the tax year.
Not all Contractors or Vendors need to receive a Form 1099-NEC Before issuing a 1099-NEC form you should determine if the Contractor is eligible:
1. Must be an Independent Contractor (not an employee)
2. Business must be structured as an LLCs or Partnership (Corporations do not require a 1099)
3. Payments to the contractor must exceed the $600 threshold in the tax year
1. Corporations (including LLCs or partnerships treated as a S or C-Corp) - Only LLC or Partnerships are eligible to receive 1099s
2. Suppliers - Payments to Contractors for merchandise or goods do not need to be issued a 1099.
3. Payments Made via Credit Card or Paypal - Payments made to Contractors via credit card or through Paypal do not need a 1099.
4. Personal Expenses - Expenses paid to Contractors for personal use do not need to be issued a 1099
For a complete list of exclusions be sure to review the IRS Guidelines
You paid ABC Painting, LLC $3,000 via Check to paint one of your house flips. In this scenario, ABC Painting would need to be issued a 1099-NEC because they are an Independent Contractor, structured as an LLC that was paid via check over $600 in the year.
You flipped 5 houses and spent $28,520 at Home Depot in 2020. In this scenario, Home Depot would **NOT** need a 1099-NEC because they are a Corporation & you likely paid Home Depot with a credit card which is reported to the IRS by the payment processor.
You paid $800 for appliances from a random guy off Craigslist and paid cash. In this scenario, the random guy off Craigslist would not need a 1099-NEC because you paid for 'goods' or 'merchandise' and did not pay for a Service.
For 2020, you will need the issue your Statements to your Recipients and the IRS by February 1st.
For a simple, plain-English write up of filing Vendor 1099's checkout this article:
How to Determine Who Receives a 1099
Here's more information on Filing 1099-NEC from the IRS:
https://www.irs.gov/pub/irs-pdf/i1099msc.pdf
**Just like everything tax related there are all kinds of weird, confusing rules and exclusions. When in doubt talk to an accounting professional!
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