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For more information, please refer to our specially-prepared 1099 questionnaire.
Here at the Harding Group, we always strive to serve our clients and customers the best way we can. From time to time, we put out informative email blasts that explain difficult-to-understand concepts based on tax paperwork, such as 1099 forms, that might not be easy to fill out and submit before their relevant deadlines close. For more information, please refer to our specially-prepared 1099 questionnaire.
Who Should Read This?/Executive Summary
Let’s begin with an overview of the target audience for this piece. Small business owners, independent contractors, and landlords should sit down and read this so that they can get a rundown of what they obligated to provide or complete when filling out a stack of 1099 forms. There are several reasons why the members of this audience must file such paperwork; if they do not, then they will be subject to unpleasant consequences such as penalties and interest.
Who is Eligible to Receive a 1099 Form?
Now then, let’s have a look at who is supposed to get a 1099 form. Eligible recipients include people or businesses that you paid at least $600 to in 2020 for services they performed. However, there is one notable exception: if the business is incorporated, then the circumstances regarding the filing of 1099s changes accordingly. You’ll know a business is incorporated when you see “Inc” or “Corp” after their company name. That said, LLCs are a unique case – they aren’t viewed as incorporated for the purposes of 1099 proceedings unless you furnish a W-9 form proving that the LLC is being taxed as a corporation.
Legal services also have special circumstances around them when it comes to 1099s. This simply means that any payments for legal services over the specified $600 amount have to be recorded on Form 1099-NEC; this still applies even if the firm you hired counts as a corporation.
The Amount That is Enclosed
In this case, the term “amount” could be a source of confusion. It covers the amount paid for the services you were rendered – but materials and reimbursements can be written off so long as you have documentation or receipts to back up your claims. Payments by credit card are exempt from this type of reporting because credit card companies will issue 1099-Ks.
The Final Deadline
All 1099s are due to their respective recipients by January 31st, 2021.
Trust the Professionals at the Harding Group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.