| Every calendar
year, payments made to non-employees for personal services they
provide you in the course of your business, are required to
be reported to the Internal Revenue Service. The due date for
mailing the recipient’s copy is January 31st while the
IRS copy must be mailed by February 28th. Following is a list
of requirements for your use in determining if your business
is required to file these forms and, if so, what payments and
for which individuals you are required to report. This list
is not exhaustive, but instead represents those requirements
most often applicable. If you have any questions or concerns
about your particular situation, please do not hesitate to call.
We have also included information regarding additional reporting
requirements of non-employees imposed by the State of California,
because these reporting requirements affect the same types of
individuals and service payments covered by the federal form
1099 filing requirements.
Form 1099-MISC, Miscellaneous Income
The following payments must be reported on form 1099-MISC:
 1.
$600 or more for personal services performed by non-employees
2.
$600 or more for rent
3.
All amounts paid to attorneys or attorneys’ corporations
4.
$600 or more for amounts paid to physicians, physicians’
corporations, or other health and medical services suppliers.
5.
$600 or more for prizes and/or awards
6.
$10 or more for royalties
7.
$5,000 or more of direct sales of consumer goods for resale
A 1099-MISC must also be provided to each non-employee from
whom you withheld Federal income tax under the backup withholding
rules, regardless of the amount.
Report only payments made in the course
of your trade or business. Personal payments are not reportable.
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Payments that do not
require reporting on Form 1099-MISC include:
1.
Payments made to corporations, except for medical and health
care payments & attorney’s fees
2.
Payments for merchandise, telegrams, telephone, freight, storage
and similar items
3.
Payments of rent made to real estate agents
4.
Wages paid to employees (instead report on form W-2)
5.
Payments made to a tax-exempt organization or governments
Form 1099-INT, Interest Income
Interest amounts of $10 or more paid in the course of your
trade or business are required to be reported on form 1099-INT.
You are not required to report interest paid to corporations,
tax-exempt organizations, or governments. Additional rules
regarding 1099-INT reporting are extensive, so please call
with any specific questions.
Form DE 542, Report of Independent
Contractors
If you are required to file forms 1099-MISC to report payments
made for personal services provided by non-employees, you
are also required to report to the State of California the
identifying information requested on form DE 542. The form
must be submitted to the Employment Development Department
for each service provider within 20 days of entering into
a contract for $600 or more, or making payments totaling $600
or more, whichever occurs first. Form DE 542 is required to
be filed every calendar year for each service provider meeting
the $600 payment threshold.
To obtain forms and/or information, call the Employee Development
Department hotline number (916) 657-0529
or the toll-free number 888-745-3886,
or access their Internet site at www.edd.ca.gov.
For magnetic media filing, call (916)
651-6945.
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