SAN ANTONIO, Jan. 31, 2018 /PRNewswire/ -- Business owners often hire contractors to help their business run efficiently, but properly tracking payments to service providers can be a challenge. Ensure your tax reporting is correct for 2017 with these five Form 1099-MISC preparation tips from the American Payroll Association.
1. All Non-Corporate Service Providers Must Receive Form 1099-MISC. If you paid a service provider at least $600 for services during 2017, you must provide a 1099-MISC to them no later than January 31, 2018. If the provider is a corporation, you generally do not have to provide Form 1099-MISC.*
*Owners must provide Form 1099-MISC to sole proprietorships, partnerships, and attorneys or medical service providers who do business as corporations. Determine if a service provider is considered a corporation by having them complete IRS Form W-9, Request for Taxpayer Identification Number and Certification.
2. Protect Yourself Against Risk. If you are unsure whether a Form 1099-MISC is required, send one anyway. If you don't send all qualified service providers their Form 1099-MISC, you set yourself up for possible penalties.
3. Deadlines Matter. If you're sending Forms 1099-MISC to service providers by mail, make sure to send them out no later than January 31, 2018. If your Forms 1099-MISC include an amount in Box 7, Nonemployee Compensation, you have until January 31, 2018 to send paper copies to the IRS (less than 250 forms) or file electronically. If there is nothing in Box 7, February 28 is the last day to submit paper copies to the IRS (April 2 if you file the forms electronically).
4. TIN Truncation. Payees' Tax Identification Numbers (social security number or employer identification number) may be truncated (i.e., masked) on their paper or electronic copies, but forms filed with the IRS must contain their full TINs. Under the truncation procedure, the first five digits are replaced with either asterisks or Xs: ***-**-1234 or XXX-XX-1234.
5. Put Your Credit Card to Work. If you paid for contractor services with a credit card, debit card, or gift card, do not file the Form 1099-MISC. The bank or credit card company that made the actual payment will take care of it for you by sending the contractor Form 1099-K.
The American Payroll Association (APA) is the nation's leader in payroll education, publications, and training. For additional tips and resources, visit APA online at americanpayroll.org.
SOURCE American Payroll Association