Form 1099-Misc is a form for reporting various forms of miscellaneous income. This income qualifies if it is received in the course of a trade or operation of a business and meets any of the following qualifiers over the course of the tax year:
- $10 or more in royalties
- $600 or more in rent
- services performed by non-employees, prizes, or attorney payments
Also, when the income is to a C-corporation or S-corporation, as classified by the IRS, form 1099-MISC is not applicable. The exception to this corporation rule is attorney fees, which do qualify for the 1099-MISC even if provided by a C-corporation or S-corporation.
Please note that this is just a summary of the categories. A full list of qualifying incomes can be found on the IRS website.
One suggestion I have is, when you start a new business relationship with a vendor, have them fill out a W-9. This will give you and your tax professional the information necessary to determine if a 1099-MISC will be necessary as well as providing necessary information in the event that providing a 1099-MISC is required.
Software Options to Help You File the 1099
There are also many pieces of software that can assist you in determining the necessity of the 1099-MISC as well as preparing and electronically filing. My personal favorite is Track1099 because it allows for emailing a copy to your vendor along with electronically filing to the IRS.
Certain QuickBooks subscriptions also support the 1099. Intuit also provides a product, separate from QuickBooks, for filing 1099s. Note that all of these have a cost associated. I have provided links to the three that I mentioned below, although they are far from the only available software for filling out and filing 1099s.
Further information on the 1099-Misc, provided by the IRS, can be found here (PDF).