U.S. IRS 1099-MISC form
Q.My understanding of the U.S. IRS rules for when someone has to generate a 1099-MISC form is: If "Jack's Plumbing" installs my new bathroom for, say, $2000, if he is a corporation I just send him a check, if he is a sole proprietor (he does a 1040 Schedule C) then I am supposed to send a 1099-MISC to the IRS as well. My questions: If RW Associates (that's me) does $2000 worth of work for someone and they don't send a 1099 to the IRS, will the IRS get mad at me or the payee? Does the IRS pick on computer contractors in this regard?
A.Right. The general rule is you have to file a 1099-MISC for each independent contractor to whom you pay at least 600 dollars per year for services rendered. You do not have to file a 1099 for any contractor you used who is incorporated Your client is legally liable for the filing of 1099-MISC information returns, not you. The only reason the IRS will possibly go after you is if you didn't pay taxes (if you owed them). They may also go after you if they did a payroll tax audit of your client and decided that you weren't really working for the client as an independent, but rather as an employee. Even in this case, the client will bear the brunt of the penalties
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