It is the time that 1099s and W2s are to be sent out. Technically, they should be mailed by Monday. However, you do have a little more time to get them out. This BLOG newsletter is principally for our business clients (and those individuals that have rental properties).
This year, we have a major change to the 1099s. The change is on WHO should receive a 1099 from you. If you have received a W9 to fill out, you would have noticed a change to the 1099. The change is for the limited liability companies (LLCs). In the past, all LLCs got a 1099 if they provided your company with over $600 in services. The change for this year is based on how the LLC files its taxes. Here are the possibilities for the LLCs:
LLC filing a partnership return - 1099 should be filed
LLC filing a corporate return (either Form 1120 or Form 1120S) - 1099 should NOT be filed
LLC that is a disregarded entity owned by a corporation - 1099 should NOT be filed.
LLC that is a disregarded entity owned by other than a corporation - 1099 should be filed.
LLCs are a unique business. They can either be a corporation, partnership or a disregarded entity based on elections made by the owner. The idea of the new rules is to treat the LLC as if it WAS a corporation, partnership etc. And thus those specific rules would apply to the LLC.
REMINDER ON 1099s
Remember 1099s should be sent to individuals and companies that are not treated as a corporation for services provided to your company that you PAID $600 or more. The key is that they provide a service. If you received a tangible (I like to say can you touch the product) item, then a 1099 is not required. It gets complicated. For instance, a plumber sells you a toilet would not receive a 1099 (you can touch the toilet) but a plumber who flushes your line would receive a 1099.
In addition to services, a 1099 should be sent for rents paid to the same type of entities if the amount paid is $600 or more.
Also, medical payments and attorney payments that are $600 or more should receive a 1099 no matter what form of organization the law firm or doctor's office operates (even corporations).
Finally, obtaining blank forms is very hard. The IRS does not provide forms unless you order them from the IRS. We do not have blank forms either as our software draws the forms as we print the 1099s or W2s. If you need 1099s or W2s, my suggestion would be to check the office supply stores as they carry forms and software to assist you in preparing them.