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1099 Reporting Requirements

  • January 2, 2015 by hamiltontharp
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1099-MISC Reporting Requirement –IMPORTANT

1099-Misc forms are due to the recipients by Monday, February 2, 2015 for the 2014 calendar year. 

The Form 1099-MISC reporting rules apply to any business (whether a sole proprietorship, partnership, or corporation) that makes a payment for services or rents to non-employees when:

  • Payments total more than $600 for the year

AND

  • The recipient is an individual or unincorporated entity including LLC’s and partnerships.

3.)  Payments to corporations are excluded from 1099 reporting except for payments to corporations for legal services.

When the tax identification number is not provided by the service-provider, the payment is subject to Federal backup withholding at 28% and California backup withholding at 7%.

Payments by CREDIT CARD are NOT TO BE INCLUDED in 1099 reporting.   These amounts are being reported directly to the companies/individuals by their Credit Card Servicing Company on form 1099-K.

The best way to get accurate information from vendors is to obtain a completed form W-9 and have it completed prior to making any payments.    Attached is a current version of Form W-9 for your convenience or you can download at www.irs.gov (under Forms and Pubs tab).

In addition to 1099-MISC filing, the state of CALIFORNIA still requires notification, on an annual basis, of all independent contractor arrangements.  To meet this requirement you MUST file Form DE 542 within 20 days of entering into a contract with an independent contractor or making a payment of $600 or more. This form has to be filled out EVERY YEAR and should include any individuals for whom you will be providing a 1099-MISC.

For a faster, easier, and more convenient method of reporting your DE 542 information, you are encouraged to report online using the EDD’s e-Services for Business. Visit the website at

https://eddservices.edd.ca.gov  to choose the option that is best for you.

Attached is a blank Form 542 or you can download at http://edd.ca.gov/pdf_pub_ctr/de542.pdf .

Failure to file Form 1099 can result in the disallowance of deductions, assessment against the payer of the 28% and 7% backup withholding and penalties for failure to file.

Should you have any questions, please contact our office at 858.481.7702

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