Who do I need to give a 1099 to?

You should give a 1099 to any vendor who is not incorporated that you paid more than $600 to for services during any calendar year. You do not need to include the cost of materials or reimbursements on the 1099 if the vendor broke those expenses out on their bills. You do not need to give a 1099 to anybody who is incorporated. except lawyers; for some reason the IRS thinks all lawyers should receive 1099's.

You can download the instructions for 1099's from the IRS website. Have subcontractors fill out an I-9 Request for Taxpayer ID - also available from the IRS website - BEFORE you start paying them, because it's a lot easier to get the information then, rather than waiting until January with a filing deadline approaching. If a vendor thinks they are incorporated but you don't, you can check using the Mass. Corporate Database.

If a vendor refuses to fill out an I-9, DON'T work with them. Chances are they have some kind of tax issue or are an illegal worker - you don't need to get in the middle of that! And please remember, the information on an I-9 or a 1099 is confidential - keep them in a secure area, save them for at least three years, and shred anything you're throwing away.

Tagged With: 1099 Subcontractors,  General Business