What are Form 1099s & Form W-9 and why do I need them?

 

Did you know you could be liable for paying taxes for vendors that you have already paid?

The IRS requires that companies, non-profits and governmental agencies file Form 1099 annually, generally to vendors who have provided you service of more $600 in a year. The easiest way to do this is to obtain a completed “Request for Taxpayer Identification Number and Certification” (Form W9).

If you can’t obtain the information required to fill out 1099s from your vendor, you must withhold 28% and pay it over to the IRS on Form 945. This is called backup withholding tax. If you do not backup withhold, you may be liable for this tax. Therefore, we suggest always getting a W9 upfront before paying a vendor a payment of over $600.

You do not have to issue 1099s to corporations. However, the IRS cautions “DO NOT automatically treat a payee as a corporation simply because the payee’s name ends with “LLC”, “Company” or “Co.”” Thus, it is wise to get a W9 even if you think it is a Corporation.

You also do not need to obtain W9s from (or provide 1099s to) utility companies, companies in which you purchase merchandise or goods from, or storage companies.

Examples of Services that would require a 1099 include:

  • Attorneys (even if incorporated)
  • Medical and Health Care Services (even if incorporated)
    • Ambulance Services
    • Dentists
    • Doctors
    • For-Profit Hospitals
    • Lab Services
    • Optometrists
    • Private Duty Nurses
    • Psychiatrists
    • Psychologists
    • Rehabilitation Centers
    • Therapists
    • Veterinarians
  • Advertisers
  • Auto Repair
  • Contract Labor
  • Construction
  • Custodial/Maintenance
  • Landscapers
  • Locksmiths
  • Photographers
  • Printing Services
  • Professional Services
  • Accountants
  • Appraisers
  • Architects
  • Consultants
  • Engineers
  • Referees
  • Rubbish Removal
  • Office Space
  • Parking Lot Space
  • Equipment

 

© 2017

Houldsworth, Russo & Company, P.C. is a public accounting firm providing assurance, tax, and consulting services to non-profit and government organizations, individuals and businesses.  Since 1996 HRC has provided quality service to the Las Vegas and surrounding communities through the active involvement of experienced, committed professionals. 

Material discussed in this blog is meant to provide general information and should not be acted upon without first obtaining professional advice appropriately tailored to your individual circumstances.