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A 1099-MISC needs to be issued by your trade or business under many situations when you pay someone for rent, services, royalties or other various fees.
Calculate if you paid $600 or more during the tax year in the course of your trade or business to an individual or partnership. Professional fees to an attorney, doctor or other professional are included. Payments to corporations are included only if they are for medical, health care, legal or fishing activities.
Determine that you paid $600 or more in compensation for services rendered by a nonemployee to your trade or business. Include the gross amount of payments in box 7, including anything you paid the contractor for supplies and materials.
Determine that you paid $600 or more in rent for office space, machines, equipment or land in the course of your trade or business. Write the amount in box 1. Do not include amounts paid to corporations or real estate agents.
An independent contractor receives a 1099-MISC only if you pay him in the course of your trade or business.
# Intentional disregard of the filing requirement can result in a penalty of $100 per form, with no maximum penalty.
# An incorrect tax identification number (TIN) on the form is considered the same as not filing at all.
Essentially - anyone you will potentially pay $600 a more in a calendar year for a service that you consider an expense of your business needs to provide you with a completed W-9. You must complete a 1099-MISC for them unless they are a corporation ( the only way to know that is via a W-9). If you are audited, the IRS will want a list of your expenses by who they were paid to. If any of those are over $600 for the year, they will want to see the corresponding 1099-MISC or the W-9 showing that they are a corporate entity.
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