1099s All over the place

[Texas_Signmaker]

Why do companies I SELL stuff to, (a mix a labor AND product) have to send me 1099s? I have stacks of them coming in the mail. I get the "checks and balances" argument but it's only like less the 10% of the money I made is on those 1099s... Technically leaves the other 90% unchecked and balanced.

 

[Mainframe]

Big brother trackin!

 

[Billct2]

Just to cover their butt. Easier to send them to everyone than figure who should really get them.

 

[WildWestDesigns]

I do believe that if it's at or above $600 within the calender year, they are supposed to do that.

I'm assuming that they are 1099-Misc.

There is a penalty for not filling, so it can be a sizable chunk as it's a fine per lack of filling.

 

[bob]

Depends on how your report your taxes. Mine are on a schedule C [I think] and merely a part of my personal income tax filing. That being the case I don't do 1099's. Ever. I'm not a contractor, I'm a merchant. I buy stuff and sell stuff. No different than down to my local green grocer. I explain this to those few who insist on 1099's and W-9's. I simply tell them that I will not under any circumstances provide a W-9 or accept a 1099. If that runs afoul of their system then they should change their system. If they owe me money and refuse to pay without the paperwork I explain that regardless of their requirements they still owe me the money and if it's not forthcoming a court date, usually small claims, will be in their immediate future. To date no one has not paid and I have yet to accept a 1099 or submit a W-9.

 

[equippaint]

You're required to 1099 any individual/sole proprietor that you spend over $600/year with. State and federal will get you if you are ever audited and are not doing this. They want to be sure you don't 1099 employees and call them contractors to avoid taxes and fed wants to be sure people you pay are paying their taxes. If you get hit and have to reclass people that you 1099, it can get very expensive. You'll usually get stuck with extra workers comp premiums when they audit you too if they dont have their own insurance.
I'm pretty sure you are also required to W9 any businesses (corp, llc) just the same. Its not "their system" its the law and most of us choose to follow it.

 

[Johnny Best]

You just put all the 1099s together and give them to your accountant. Just don't claim the other amount you made and you won't have to pay that much federal tax. They can audit your bank accounts to see how much you deposited. If you pay state sales tax then that is another way they can find out. You just have to make sure you work and pay your 40 quarters so as to collect SS when you reach that age.
Good luck at H&R Block. You also can claim that home office in your backyard as a deduction. If it had a bathroom you could claim it as a mother in law addition. Also an IRA account would knock down your taxes.
Use to put $5,000 in one every year for myself and wife. Then when you are older put it all in an annuity.

 

[WildWestDesigns]

The purpose of a 1099-MISC (I'm assuming MISC in this case by the odds of what we would most likely be dealing with) is to put the kibosh on "working under the table". Or at least mitigate federal revenue lost due to it.

I'm willing to bet most people wouldn't mind rampant "working under the table" versus having to do the paperwork that the IRS wants. So, in my mind, to think that this is a system that a business would willingly engage in, is pretty out there.

Even if someone refuses to give a W9 so they can be 1099'ed, doesn't mean that the IRS didn't get a form for it.

Landlords are also required to get 1099'ed. So it isn't just contractors. In fact, freelancers (gee I wonder if there are any in this group) and consultants are required to get them.

 

[bob]

...ignorancia mercifully deleted...
...Its not "their system" its the law and most of us choose to follow it.

It most certainly is a result of just how they've structured their accounting system. I do business with many large organizations for which no 1099 silliness is ever needed. In fact I find that it's the smaller operations that often seem to have set up their system in a way that requires such nonsense. As previously stated, change your system. Don't inflict your choices on me.

 

[equippaint]

Bob, what planet do you live on? Where Im from, the federal governement sets up this system. You obviously havent got a clue about what you are talking about. It doesnt matter what you believe, it does not make it fact and certainly does not negate the law. You are required by law to submit a w9 upon request. Theres a $50 penalty for failure to provide the requested information each time. The requesting company is obligated by law to report you for not returning it and to retain 28% backup withholding from your payments. If you are a sole proprieter, they can still 1099 without your ss number which will trigger a penalty and possibly an audit.

 

[WildWestDesigns]

I do business with many large organizations for which no 1099 silliness is ever needed.

In fact I find that it's the smaller operations that often seem to have set up their system in a way that requires such nonsense. As previously stated, change your system. Don't inflict your choices on me.

Bare in mind, a 1099 can still be filed for you without your willingness to give a W9. You may or may not receive a copy of it.

It has very little to do with accounting method, but by other criteria. Now the smaller operations that you have dealt with, my be trying to error on the side of caution by filing when they may or may not need to. There are exceptions to this, but for what I have found on the IRS site, it has nothing to do with accounting method.

Straight from the IRS website, the 4 basic criteria for sending a 1099MISC are:

• You made the payment to someone who is not your
  employee.
• You made the payment for services in the course of your
  trade or business (including government agencies and
  nonprofit organizations).
• You made the payment to an individual, partnership,
  estate, or, in some cases, a corporation.
• You made payments to the payee of at least $600 during
  the year.

The "in some cases" refers to corporations that are medical and/or legal in nature.

Nothing in there about accounting method. I've known people to get W9'ed by corporations (freelance writers). It really depends on who is receiving money versus who is giving money.

 

[Johnny Best]

1099 was not designed to help the people getting them. It shows the company producing them that they paid that out to sub contractors so as to reduce their income tax payout. bob is right if you don't want them don't give them the information, nothing will happen to you. But, if you have interest paid to you through investments over $600 they will send you one because they have your SS # and address already. If you want to avoid getting taxed, go to Barbados and set up off shore banking accounts in a fictious name or just get paid in cash and get a large safe bolted to the floor in a closet.

 

[WildWestDesigns]

But, if you have interest paid to you through investments over $600 they will send you one because they have your SS # and address already.

You are talking about 1099-INV, not the same thing as 1099-MISC. There are various 1099 forms.

Now, a 1099-MISC can still be sent out on file with the IRS if you don't send a W9.

I posted the requirements that the IRS has on their site for a 1099-MISC, what triggers it etc.

 

[bob]

Bob, what planet do you live on? Where Im from, the federal governement sets up this system. You obviously havent got a clue about what you are talking about. It doesnt matter what you believe, it does not make it fact and certainly does not negate the law. You are required by law to submit a w9 upon request. Theres a $50 penalty for failure to provide the requested information each time. The requesting company is obligated by law to report you for not returning it and to retain 28% backup withholding from your payments. If you are a sole proprieter, they can still 1099 without your ss number which will trigger a penalty and possibly an audit.

Perhaps you might spend a moment contemplating the concepts of 'contractor' and 'merchant'. 1099's are for contract workers, merchants do not participate. I am a merchant, a retail seller. When someone purchases something from a merchant, no matter how expensive, no W-9's and 1099's are exchanged. Whether or not a client insists on giving you a 1099 depends very much on just how that client has set up its accounting system an into which category it has placed you in that system.

At one of the venues where I compete the management will insist on a 1099 if I win more than $600.00 in a year. Since these people are good friends, their accounting fetishes aside, that's the one 1099 I accept but it has nothing to do with my business. They are wont to distribute 1099's to those that have won more than the trigger amount solely because their accounting system was set up by an idiot, or a coven of idiots. I compete at a number of places and this is the only one that does 1099's.

 

[unclebun]

1099 Rules for Business Owners in January 2018

 

[Solventinkjet]

In my experience, if you are an LLC they have to get a W9 and then 1099 you as if your company was an individual. If you are an S-Corp, like us, they will ask for a W9 but upon finding out you are an S-Corp, they will not 1099 you.

 

[Johnny Best]

So bob was right, he is schedule C and you don't send 1099 to them.

 

[equippaint]

Sole proprietors file a schedule C. Sole proprietors, partnerships and LLC sole proprietors are required to be 1099d. Corps, S corps and LLC s corps you are not required to. Companies send a W9 to either verify your EIN and your corporate structure to be sure they do not have to report or to issue a 1099 at the end of the year as the law says.
If anyone as a business owner is content with potentially paying other peoples taxes than by all means feel free to not follow this. The only people I have ever ran into that have a real problem with being 1099d are either scamming disability or low lifes trying to dodge child support. Unfortunately many out there will employ them under the table.

 

[WildWestDesigns]

Sole proprietors file a schedule C. Sole proprietors, partnerships and LLC sole proprietors are required to be 1099d.

Only if they meet all 4 of those conditions that I listed in a post above and they don't fall under some exception.

Depending on if they were giving or receiving payments will determine on if they give or receive 1099s.

Corps, S corps and LLC s corps you are not required to.

Except legal and/or medical. Those do get 1099'ed.

"bob" may not need to or get 1099'ed with regard to his business. Don't know. All of his prize earnings should be (over certain amounts). Just because some of them do not 1099 him, doesn't mean that the one place that does have some funky accounting that they do.

I do compete in equestrian events as well (I'm assuming that's what "bob" is talking about given his avatar) and all the ones that I deal with ask for your info when you sign up before you may have won any cash prizes.

Those that are adamant against 1099 period, I have to wonder if they are against having a paper trail.

 

[Texas_Signmaker]

Just to clear things us. I'm not adamant against 1099s. I'm 100% on all my financials and taxes because I like a clear mind to sleep at night. Just seemed odd that when I sell merchandise (along with service) that I get 1099-MISC. I get the argument for service or "labor" but selling things was where I questioned it. If one is going to cheat on taxes I'm sure the random 1099s wouldn't prevent them one bit to do so, just more of an annoyance for me when filing taxes.