Due Diligence Requirements Associated with Form 1099-MISC and Form W-9

It’s always good to brush up on your awareness of the requirements for 1099s and W-9s. Here an overview for your review and to share with your clients.

Form 1099-MISC (Miscellaneous Income) is required to be filed when your clients make payments of $600 or more for services performed for their business by people not treated as employees. For independent contractors, such as attorneys and accountants, no withholding is required, but you need to provide the contractor and the IRS with Form 1099-MISC. Nonemployee compensation, such as fees, commissions, prizes and awards for services, is reported in box 7.

Form 1099-MISC for nonemployee compensation payments reported in box 7 is required to be filed by Jan. 31 in the year following when the services were provided. If clients failed to do this, the penalty against the company varied from $50 to $260 per form for tax year 2016, depending on how long past the deadline the company issued the form. If a company intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $530 per statement with no maximum.

Please refer to Due Dates and Penalties for Form 1099-MISC for more information.

Form W-9 is used to request the taxpayer identification number (TIN) of a U.S. person (including a resident alien) and to request certain certifications and claims for exemption. Clients and preparers need the information in order complete the contractor’s Form 1099-MISC.

As always, check back on the Intuit® ProConnect™ Tax Pro Center for tax updates.