Overview of 1099 Forms
The IRS requires businesses to issue 1099-MISC forms to most non-corporate independent contractors or service providers paid $600 or more. Exceptions exist for C-Corporations and S-Corporations, except for certain types of payments.
When to Issue 1099 Forms to LLCs
- Single-member LLCs taxed as Sole Proprietorships or multi-member LLCs taxed as Partnerships should receive a 1099-NEC form if paid $600 or more for services.
- LLCs taxed as S Corporations or C Corporations generally do not require a 1099.
- LLCs receive 1099 forms unless they are taxed as S corps, with earnings subject to self-employment tax.
Compliance and Exceptions
If you make a mistake or forget to file a 1099 form, the IRS will flag it. While S Corporations typically do not need a 1099 form, specific payments to S Corps may necessitate one.
Exemptions from 1099 Forms
C-Corporations, S-Corporations, and certain medical and health care payments are exempt from the 1099 reporting requirement.
Additional Information
- A 1099 is used for reporting non-employee compensation.
- Corp-to-corp refers to payments made between two corporations.
- Issuing 1099 forms is crucial for accurate accounting and tax purposes.