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How to Issue a 1099 Tax Form to an LLC?

Have you hired an individual to perform services on business? Did you collect the W-9 Form from them? If your answer is “No”, then you need to request a W-9 Form from the contractor before making the first payment in the tax year. Read full article for 1099 Tax Form.

Getting confused? Why collect W-9? Don’t worry we will let you know the importance of collecting the W-9 Form. Moreover, you’ll also get to know how to issue a 1099 return to a Limited Liable Corporation.

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How to Issue a 1099 Tax Form to an LLC?

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What are the major complexities of managing a business?

One of the major complexities of managing an organization is dealing with various details when filing business tax returns. This includes tracking business expenses, filing out necessary tax forms for employees, contractors who performed services to your business during the calendar year. Among all the tax forms, Form 1099s are the most common tax forms used by business owners to report independent contractor income. So, in some cases, it becomes complicated to figure out who gets 1099. As we know, an independent contractor can be an individual, estate, partnership, LLC, or corporation. By identifying the individual, you can save time and money during the tax season.

When do LLC’s get a 1099 Form?

W-9 Form helps the business individual to figure out whether to issue a 1099 Form to the contractor or not. On the W-9 Form, the contractors have to check the boxes that reflect their business. This includes individuals/sole proprietors, C or S Corporation, partnership, and LLC, etc. For instance, if the contractor is an LLC, he/she must also check the box whether the LLC is taxed as a corporation or not. If the LLC is taxed as a C or S corporation, then you don’t have to issue 1099. Or else, if the individual is a single-member LLC or partnership, then the contractor receives a 1099 Tax Form. This is because single-member LLCs are considered disregarded entities. Moreover, the LLC can be considered as an individual for tax purposes. Hence, single-member LLCs receive information return forms.

What if you file 1099 for an LLC that doesn’t require one?

In some cases, the contractor might check the wrong box on the W-9 Form or forget to file a W-9 Form. So, you may not get penalized even if you file 1099 for the contractors who don’t require one. On the other hand, if your contractor was supposed to get a 1099 but failed to file the form, then you may have the risk of getting penalized per the 1099 Form that was not filed. So, to avoid these confusions by request the payee to fill out the W-9 Form. When you’re not certain about the contractor you have hired, then you can file a 1099 return. This helps you to cover the unnecessary penalties.

IRS Form 1099 E file

Why don’t S or C corporations don’t get a 1099?

As per the IRS guidelines, payments made to individuals who are treated as S or C corporations are not reported on a 1099 Tax Return. But the business individuals must report these payments as a part of business expenses. Moreover, the S or C corporate contractor must include the income on the tax return. given below are the specific payments made to corporation reported on 1099 Tax Form:

  • Medical and health care payments made to C or S corporations reported on 1099 MISC.
  • Substitute payments in lieu of dividends or tax-exempt interests are reportable.
  • Gross proceeds paid to attorneys for providing legal services are reported on 1099 Tax Return.

Where to send an IRS 1099 Tax Form?

At the beginning of each calendar year, you must fill out a separate 1099 Form for each contractor, partnership, or LLC whom you paid in the prior year. After filling out the respective information, ensure to provide individual copies at the year-end. As per the IRS 2020 guidelines, the payer must issue recipient copies by January 31st every tax year. So, make sure to collect the W-9 Form before making the first payment to the contractor. Start filling out the information returns in the middle of January. However, the payer is responsible to file Form 1099 with the IRS. Filing deadlines are at the end of February for paper forms and the end of March for e-forms.

Form 1099 Online is an IRS-certified e-file provider. We provide you a better solution for the queries which occur during filing a 1099 return. Our US-based chat support team is available 24*7 through live chat through email, mail, and phone support.

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