Which 1099 to use? Determining which form to use can be a chore!
In the most recent issue of The General Ledger, put out by the American Institute of Professional Bookkeepers, they take great care to outline when and why you should choose one 1099 form over the other. Here's the basic outline:
The 1099-NEC. Used to report payments of $600 or more to non-employee (e.g., ICs and freelancers); formerly reported on a 1099-MISC, Box 7. Be sure to check their actual corporate status!
The 1099-MISC. Used to report a variety of miscellaneous distributions to individuals, including payments for rent, prizes and awards.
You must file a 1099-MISC for any nonemployee to whom your firm paid at least $600 during the year in:
■ prizes and awards (e.g., to a customer who won your company’s raffle or won a prize at your firm’s grand opening), or trips (e.g., to honor a retiree)
■ other income payments
■ medical and health care payments
■ payments to an attorney for legal services (reported in Box 14)
■ dividends of $10 or more for the year
1099s must be timely—and correct—to avoid penalties. Start soon to avoid filing the wrong form or filing the right form with errors.
If any of this information fills you with dread... call us! It's our job to know which forms to use and when, for your business and your books. As members of the AIPB and professional bookkeepers, we can help take the fear out of your finances, and free you up to spend your time making money, not managing it.