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    1099-misc

    I get stiff resistance from clients regarding filing 1099-MISC and to be honest, I'm not 100% certain myself if they're required in some situations. Some items are obvious, like maintenance and repairs, contract labor, etc., but other areas are not so clear to me- things like laundry and uniforms, advertising agency services, etc. I've looked quite a bit at the IRS site and other internet resources but haven't been able to resolve my doubts. Any help is greatly appreciated. Thank you.

    #2
    Give the client form W-9 and tell them to send to their vendors. Anyone who does not return it, properly filled out, and saying they are a corporation, is an automatic candidate for a 1099-Misc.
    "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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      #3
      1099-Misc

      Penalties for non-issuance are stiff and more likely to be enforced in the future. I err on the side of sending out too many. It sends a clear message to clients that we need compliance. You will be the first one they call if they run into an audit and are found to be non-compliant.
      Todd Fogelberg, EA

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        #4
        It is very simple. If the payment is for services rendered a business, it is subject to reporting on Form 1099MISC. It does not really matter if the business provides both goods and services, it is still subject to reporting.

        If only goods are purchased, no 1099MISC.

        The IRS provides some guidance if parts/goods and services are on the same invoice.

        Do not issue 1099MISC to an incorporated business or LLC taxed as a corporation (S or C). Always give attorneys a 1099MISC even if the law office is incorporated. Always give medical care providers a 1099MISC for health care payments even if incorporated.

        Do not give a 1099 to leasing agency. They are considered as passing through the rent they collect for property managers. Leasing agencies should give a 1099MISC to the property owners.

        Do not report amounts paid for services or rent if the payment is made by a credit card or debit card. The clearing company sends 1099-K for these payments. This avoids duplicate reporting.

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          #5
          Originally posted by TXEA View Post
          It is very simple. If the payment is for services rendered a business, it is subject to reporting on Form 1099MISC. It does not really matter if the business provides both goods and services, it is still subject to reporting.

          If only goods are purchased, no 1099MISC.

          The IRS provides some guidance if parts/goods and services are on the same invoice.

          Do not issue 1099MISC to an incorporated business or LLC taxed as a corporation (S or C). Always give attorneys a 1099MISC even if the law office is incorporated. Always give medical care providers a 1099MISC for health care payments even if incorporated.

          Do not give a 1099 to leasing agency. They are considered as passing through the rent they collect for property managers. Leasing agencies should give a 1099MISC to the property owners.

          Do not report amounts paid for services or rent if the payment is made by a credit card or debit card. The clearing company sends 1099-K for these payments. This avoids duplicate reporting.
          You did not address how to treat schedule C Accountants? Good reply post
          Always cite your source for support to defend your opinion

          Comment


            #6
            Originally posted by mbigelow View Post
            I get stiff resistance from clients regarding filing 1099-MISC and to be honest, I'm not 100% certain myself if they're required in some situations. Some items are obvious, like maintenance and repairs, contract labor, etc., but other areas are not so clear to me- things like laundry and uniforms, advertising agency services, etc. I've looked quite a bit at the IRS site and other internet resources but haven't been able to resolve my doubts. Any help is greatly appreciated. Thank you.
            Why are they giving you resistance? Unless it has to do with avoiding a processing fee, this should give you pause to consider if you want them as a client.

            Comment


              #7
              Why Resistance?

              Kathy, as experienced as you are, have you not had this kind of resistance?

              The recipients don't want to report the income, simple as that. Even if the income results in little or no tax, they don't want to go to the extra trouble to prepare a Sch C, or pay someone to do it. Many times the recipient is receiving disability or other benefits, and are working under the table to avoid disability from being cut off.

              The clients don't want to jump through the hoops of issuing 1099s, and they don't want to confront the recipients with bad news. In fact, you will get more excuses from clients than you do from recipients. It often takes me 2-3 years to get clients to where they don't argue with me. I will prepare a 1099-MISC for someone who refuses to give his SS# and tell the client that without a number, the IRS can track him down (starting with the client). It's amazing how this gets results.

              Comment


                #8
                Originally posted by Snaggletooth View Post
                Kathy, as experienced as you are, have you not had this kind of resistance?
                It's rare that I get resistance.

                I'm quite blessed to have a client base that believes in doing the right thing. On the occasion that is not true, I explain my positions and generally they agree or we decide they would be better off going to a different preparer.

                I won't prepare and sign a return that I know to be incorrect. It has to do with ethics, but also pride and a bit of stubbornness. I feel clients that want me to help in circumventing rules are taking advantage of me and that doesn't fly. There are a couple of local preparers that are well known in the preparer community to play loose and fast with the rules, and it would mortify me to be thought of that way.

                Comment


                  #9
                  Originally posted by kathyc2 View Post
                  It's rare that I get resistance.

                  I'm quite blessed to have a client base that believes in doing the right thing. On the occasion that is not true, I explain my positions and generally they agree or we decide they would be better off going to a different preparer.

                  I won't prepare and sign a return that I know to be incorrect. It has to do with ethics, but also pride and a bit of stubbornness. I feel clients that want me to help in circumventing rules are taking advantage of me and that doesn't fly. There are a couple of local preparers that are well known in the preparer community to play loose and fast with the rules, and it would mortify me to be thought of that way.
                  Proper & smart practice. Clients you may lose you are better off.
                  Always cite your source for support to defend your opinion

                  Comment


                    #10
                    Agree

                    Originally posted by TXEA View Post
                    It is very simple. If the payment is for services rendered a business, it is subject to reporting on Form 1099MISC...
                    Originally posted by TAXNJ View Post
                    You did not address how to treat schedule C Accountants? Good reply post
                    I agree, a very good post. I think accounting, bookkeeping, tax prep services were covered, too.
                    Last edited by RitaB; 01-11-2017, 11:42 AM.
                    If you loan someone $20 and never see them again, it was probably worth it.

                    Comment


                      #11
                      Form 1099

                      If you rent a storage unit to store farm equipment, do you need to issue a 1099 to the owner of the storage place(an LLC)? Page 5-8 of the Taxbook: one of the exceptions, paymens for merchandise, telegrams, telephone, freight, STORAGE, and similar items. Does the client needs to issue 1099 to the storage unit?
                      Originally posted by TXEA View Post
                      It is very simple. If the payment is for services rendered a business, it is subject to reporting on Form 1099MISC. It does not really matter if the business provides both goods and services, it is still subject to reporting.

                      If only goods are purchased, no 1099MISC.

                      The IRS provides some guidance if parts/goods and services are on the same invoice.

                      Do not issue 1099MISC to an incorporated business or LLC taxed as a corporation (S or C). Always give attorneys a 1099MISC even if the law office is incorporated. Always give medical care providers a 1099MISC for health care payments even if incorporated.

                      Do not give a 1099 to leasing agency. They are considered as passing through the rent they collect for property managers. Leasing agencies should give a 1099MISC to the property owners.

                      Do not report amounts paid for services or rent if the payment is made by a credit card or debit card. The clearing company sends 1099-K for these payments. This avoids duplicate reporting.

                      Comment


                        #12
                        Thanks for all the thorough responses so far. The IRS instructions for the 1099-MISC state that if payments are made by credit/debit card that are reported on a 1099-K, no 1099-MISC is required. I have some clients who mostly pay vendors via credit card but occasionally write a a check to the same vendors. How far do you go with this? E.g., I have a client who paid a vendor about $10,000 with a credit card and wrote them one check for $800. So do I insist on issuing a 1099-MISC for $10,800? Seems such a procedure could make it appear the vendor is receiving way more than they are ($10,000 on 1099-K and $10,800 on 1099-MISC = $20,800 instead of the $10,800 actually received.) Thoughts?

                        Comment


                          #13
                          The $10K is covered by the 1099-K. I would do only the $800 from employer.

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