1099s

What is the purpose of a 1099? 

The purpose of a 1099 is to capture the income businesses pay to contractors, individuals & other businesses, for services during the course of a calendar year. 1099s must be delivered to individuals who need one each year by January 31^st.  

1099-NEC is for Non-employee compensation. 

1099-MISC is for other miscellaneous payments, such as lawyers and rent. 

Interested in having us walk through the 1099 process for you? Reach out to us at taxes@openroadsbkkg.com. 

Who gets issued a 1099? 

The easy answer is that contractors who are paid for services in excess of $600 from a checking account in a calendar year should be issued a 1099. 

There are a couple of clues in that statement that demonstrate who should receive 1099-NEC. 

• An individual or business (Sole proprietor, LLC or Partnership) AND 
• Has been paid more than $600 for services during a calendar year AND 
• Who has been paid directly via cash, check or bank ACH 

There are 2 situations in which the organization should receive a 1099-MISC regardless of the amount. Those 2 situations are for lawyers and for anyone with whom the business has paid rent to.  

Who does not get issued a 1099? 

Employees for regular wages, those paid less than $600, and those paid through a credit card are just a few examples of those who should not be issued a 1099. 

Here is a longer list of those who should not receive a 1099: 

• Employees for regular wages 
• Those paid less than $600 
• Anyone paid by credit card 
• Anyone paid by a third-party payment processor (Paypal, Venmo, Cash app, etc) 
• Anyone paid for physical goods 
• Any business that is classified as a corporation (S Corp, C Corp, or 501(C)3) 

Still confused? Here is our 1099 Decision tree to help you out.  

Still, have questions? Reach out to us by email at taxes@openroadsbkkg.com. 

Do you need someone to file your income taxes for you?

Fill out our form located here

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Angelica Johnson

Professional Bookkeeper at Open Roads Bookkeeping

Angelica Johnson is a professional bookkeeper and owner of Open Roads Bookkeeping. She greatly enjoys helping businesses meet their full potential. Angelica has always loved numbers and spent several years as a middle and high school math teacher. She can use her love of numbers and accounting to clean and organize your books removing the stress from finances and taxes, so you can have more family time.

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